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The Sage Corporation issued 10-year, $4,000,000 par, 6% callable convertible subordinated debentures on January 2,...

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Accounting

The Sage Corporation issued 10-year, $4,000,000 par, 6% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in 2 years it will increase to 18:1. At the date of issue, the bonds were sold at 97. Bond discount is amortized on a straight-line basis. Sages effective tax was 40%. Net income in 2017 was $10,650,000, and the company had 2,060,000 shares outstanding during the entire year. (a) Compute both basic and diluted earnings per share.

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