Corporation D earned net income of $70,000 during 19A and had an average of 10,000 shares of common stock outstanding. It also had a $50,000, 8% bond payable convertible after 3 years into 2,000 shares of common stock. There is no preferred stock outstanding. 

Required

a) Determine basic EPS and diluted EPS. Assume a 2% tax rate.

b) Assume the same information as in the previous problem except that the bond was issued on October 1. Once again, determine basic and diluted EPS.

Answer rating: 100% (QA)

a To calculate basic EPS we need to divide the net income by the weighted average number of common shares outstanding Weighted average number of common shares outstanding number of shares outstanding ... View the full answer