Question

# On January 1, 2020, Monty Company issued 10-year, \$2,060,000 face value, 6% bonds, at par. Each...

On January 1, 2020, Monty Company issued 10-year, \$2,060,000 face value, 6% bonds, at par. Each \$1,000 bond is convertible into 16 shares of Monty common stock. Monty’s net income in 2020 was \$414,100, and its tax rate was 20%. The company had 101,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020 (please explain how to do these problem without using excel if possible).

(a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. \$2.55.)

 Diluted earnings per share \$enter diluted earnings per share rounded to 2 decimal places

(b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that \$1,010,000 of 6% convertible preferred stock was issued instead of the bonds. Each \$100 preferred share is convertible into 5 shares of Monty common stock. (Round answer to 2 decimal places, e.g. \$2.55.)

 Diluted earnings per share \$enter diluted earnings per share rounded to 2 decimal places

Diluted EPS is a calculation used to gauge the quality of a company's earnings per share (EPS) if all convertible securities were exercised.

Thankyou..........

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