Exercise $10-15($Algo$)$ Effect of Convertible Bonds on Earnings per Share LO $10-4$

Poppy Corporation owns $60$ percent of Seed Company$$s common shares. Balance sheet data for the companies on December $31,20$X$2,$ are as follows:

Poppy Corporation Seed Company

Assets

Cash $ $88,000$ $ $38,000$

Accounts Receivable $89,00052,000$

Inventory $112,000100,000$

Buildings and Equipment $670,00098,000$

Less: Accumulated Depreciation $(230,000)(79,000)$

Investment in Seed Company Stock $138,000$

Total Assets $ $867,000$ $ $459,000$

Liabilities and Owners$$ Equity

Accounts Payable $ $97,000$ $ $29,000$

Bonds Payable $250,000200,000$

Common Stock $($$$10$ par value$)300,000100,000$

Retained Earnings $220,000130,000$

Total Liabilities and Owners$$ Equity $ $867,000$ $ $459,000$

The bonds of Poppy Corporation and Seed Company pay annual interest of $8$ percent and $10$ percent, respectively. Poppy$$s bonds are not convertible. Seed$$s bonds can be converted into $10,000$ shares of its company stock any time after January $1,20$X$1.$ An income tax rate of $40$ percent is applicable to both companies. Seed reports net income of $$32,000$ for $20$X$2$ and pays dividends of $$13,000.$ Poppy reports income from its separate operations of $$55,000$ and pays dividends of $$26,000.$

Required:

Compute basic and diluted EPS for the consolidated entity for $20$X$2.$

Note: Round your answers to $2$ decimal places.