Ask Question
BusinessBusiness
23 September, 07:33

On January 2, 2018, Bonita Industries issued at par $2020000 of 5% convertible bonds. Each $1000 bond is convertible into 10 shares of common stock. No bonds were converted during 2018. Bonita had 197000 shares of common stock outstanding during 2018. Bonita's 2018 net income was $902000 and the income tax rate was 25%. Bonita's diluted earnings per share for 2018 would be (rounded to the nearest penny

+2
Answers (1)
  1. 23 September, 11:22
    0
    Bonita's diluted earnings per share for 2018 would be $3,80

    Explanation:

    Step 1 Calculate the Basic Earnings Per Share

    Basic Earnings Per Share = Income Attributable to Common Stockholders / Weighted Average Number of Common Stocks

    Income Attributable to Common Stockholders

    Net income $902000

    less Interest on bonds ($2020000*5%) * 75% ($75,750)

    Income Attributable to Common Stockholders $826,250

    Basic Earnings Per Share = $826,250 / 197000

    =$4,19

    Step 1 Calculate the Diluted Earnings Per Share

    Diluted Earnings Per Share = Adjusted Income Attributable to Common Stockholders / Adjusted Weighted Average Number of Common Stocks

    Adjusted Income Attributable to Common Stockholders

    Income Attributable to Common Stockholders $826,250

    Add Interest on bonds ($2020000*5%) * 75% ($75,750)

    Income Attributable to Common Stockholders $826,250

    Adjusted Weighted Average Number of Common Stocks

    common stock outstanding 197000

    add convertible bond ($2020000/$1000*10 shares) 20200

    Weighted Average Number of Common Stocks 217200

    Diluted Earnings Per Share = $826,250/217200

    = $3,80
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “On January 2, 2018, Bonita Industries issued at par $2020000 of 5% convertible bonds. Each $1000 bond is convertible into 10 shares of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
The largest sector of the economy is the consumer, or household, sector. select one: a. True b. False
Answers (1)
Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $19,000 of cash and land with a FMV of $64,000. Her basis in the land is $29,000.
Answers (1)
Equilibrium can only occur at one price. two prices. three prices. four prices.
Answers (1)
Why are healthy individual finances important to the Economy in North America?
Answers (1)
A paleontologist finds a new tyrannosaur in a site she is excavating, and wishes to date the fossil. What is the most likely method she will use? A paleontologist finds a new tyrannosaur in a site she is excavating, and wishes to date the fossil.
Answers (1)
New Questions in Business
How to train employees on principle based decision making?
Answers (1)
Harvey automobiles uses a standard part in the manufacture of several of its trucks. the cost of producing 90,000 parts is $130,000, which includes fixed costs of $70,000 and variable costs of $60,000.
Answers (1)
Gracius Manufacturing is approached by a European customer to fulfill a oneminustimeminusonly special order for a product similar to one offered to domestic customers.
Answers (1)
True or false: Regardless of the inventory costing method used, the financial statements will always report the same amount of inventory on the balance sheet and cost of goods sold on the income statement.
Answers (1)
Some newspapers have dubbed kane kramer as one of the" biggest losers" in business history, explain whether you think this is fair or unfair.?
Answers (1)
Home » Business » On January 2, 2018, Bonita Industries issued at par $2020000 of 5% convertible bonds. Each $1000 bond is convertible into 10 shares of common stock. No bonds were converted during 2018.
Sign Up Forgot Password?