41. On April 1, 2015, Lopes Company issued $100,000 in 3% convertible bonds payable at...
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41. On April 1, 2015, Lopes Company issued $100,000 in 3% convertible bonds payable at 104 plus accrued cash interest. The bonds are convertible into 30,000 shares of $1 par common stock. The bonds mature 12/31/2024 and pay interest each 12/31. Lopes uses the effective interest method to amortize discounts and premia. Bond issue costs were $2,000. On 6/30/2020, one-quarter of the bonds were converted into common stock when the yield on the bonds was 4%. Lopes began 2020 with 500,000 shares of common stock outstanding. No other stock transactions occurred in 2020. Lopes' 2020 net income was $248,000 and includes all interest expense and income tax expense computed at 25%. Instructions (a) Record the 6/30/20 bond conversion. (b) Compute 2020 basic earnings per share. (c) Compute 2020 diluted earnings per share
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