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The Carla Corporation issued 10-year, $5,060,000 par, 7%callable convertible subordinated debentures on January 2, 2020.The bonds have a par value of $1,000, with interest payableannually. The current conversion ratio is 14:1, and in 2 years itwill increase to 18:1. At the date of issue, the bonds were sold at99. Bond discount is amortized on a straight-line basis. Carla’seffective tax was 20%. Net income in 2020 was $11,200,000, and thecompany had 1,815,000 shares outstanding during the entire year.Compute both basic and diluted earnings per share.
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