Hanson Company reported net income of $44,000 for 2015. The company has 10,000 shares of common stock and no preferred stock. During 2014 the company issued $400,000 of 8 percent convertible bonds at face value. Each 1,000 bonds can be converted into 24 shares of common stock. No bonds were converted during the year. The company's tax rate is 30 percent. No additional stock was issued during 2015.

Required:

1. Calculate Hansons's basic EPS.

2. Calculate Hanson's diluted EPS.

3. In what way would your diluted eps calculation differ if Hanson had issued convertible preferred stock instead of convertible bonds?

Answer rating: 100% (QA)

1 Basic EPS of H Company is calculated as follows Net Income B... View the full answer