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Information concerning the capital structure of Bedrock Mining, Inc. is as follows: ...

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Accounting

Information concerning the capital structure of Bedrock Mining, Inc. is as follows:
20212022
Common stock 90,000 shares 90 shares
Convertible preferred stock 10,000 shares 10,000 shares
8%, $1,000 par, convertible bonds $1,000,000 $1,000,000
During 2022, Bedrock Mining paid dividends of $1 per share on its common stock and $2.40 per share on its preferred stock. The preferred stock is convertible into 20,000 shares of common stock. The 8% convertible bonds are convertible into 30,000 shares of common stock. The net income for the year ended December 31,2022 was $285,000 and the companys income tax rate was 21%.
Required:
1. What was basic EPS, rounded to the nearest penny?
2. What was diluted EPS, rounded to the nearest penny?
SOLUTION:
Basic EPS Diluted EPS
Common shares outstanding
Conversion of bonds
Conversion of preferred stock
Number of shares used in EPS computation
Net income as reported
After-tax interest on the bonds ($80,000 x $0.79)
Preferred dividends ($2.40 x 10,000 shares)
Earnings used in EPS computation
Earnings per share

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