Question

On January 1, 2020, a company issued 10-year, $800,000 face value, 7% bonds, at par. Each...

On January 1, 2020, a company issued 10-year, $800,000 face value, 7% bonds, at par. Each $1,000 bond is convertible into 20 shares of the company’s common stock. The company’s net income in 2020 was $500,000, and its tax rate was 22%. The company had 100,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020.

What is the numerator for computing diluted earnings per share for the company for 2020?

Homework Answers

Answer #1

The numerator for computing diluted earnings per share for the company for 2020 = $543,680

Explanation:

Diluted earnings per share = Adjusted net income / (Shares Outstanding + Diluted shares).

Since the given question is to find the numerator for computing diluted earnings per share, we need to compute Adjusted net income.

Net income $500,000
Add: Saving in interest (net of tax) [$800,000 * 7% (1 - 0.22)] $43,680
Adjusted net income $543,680
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2020, Windsor Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each...
On January 1, 2020, Windsor Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Windsor common stock. Windsor’s net income in 2020 was $518,400, and its tax rate was 20%. The company had 108,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $...
On January 1, 2020, Shamrock Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each...
On January 1, 2020, Shamrock Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Shamrock common stock. Shamrock’s net income in 2020 was $391,300, and its tax rate was 20%. The company had 91,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $enter...
On January 1, 2020, Skysong Company issued 10-year, $1,890,000 face value, 6% bonds, at par. Each...
On January 1, 2020, Skysong Company issued 10-year, $1,890,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Skysong common stock. Skysong’s net income in 2020 was $470,000, and its tax rate was 20%. The company had 94,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $enter...
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...
On January 1, 2017, Martinez Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each...
On January 1, 2017, Martinez Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Martinez common stock. Martinez’s net income in 2017 was $302,000, and its tax rate was 40%. The company had 95,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (b) Compute diluted earnings per share for 2017, assuming the same facts as...
On January 1, 2017, Vaughn Company issued 10-year, $2,150,000 face value, 6% bonds, at par. Each...
On January 1, 2017, Vaughn Company issued 10-year, $2,150,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Vaughn common stock. Vaughn’s net income in 2017 was $305,000, and its tax rate was 40%. The company had 97,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $...
On January 1, 2017, Andrew and Sons issued 10-year, $2,060,000 face value, 6% bonds, at par....
On January 1, 2017, Andrew and Sons issued 10-year, $2,060,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Andrew common stock. Andrew’s net income in 2017 was $294,000, and its tax rate was 40%. The company had 101,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share...
On January 1, 2020, Ivanhoe Inc. issued $2.05 million of face value, five–year, 7% bonds at...
On January 1, 2020, Ivanhoe Inc. issued $2.05 million of face value, five–year, 7% bonds at par. Each $1,000 bond is convertible into 14 common shares. Ivanhoe’s net income in 2020 was $249,000, and its tax rate was 35%. The company had 94,000 common shares outstanding throughout 2020. None of the bonds were exercised in 2020. For simplicity, ignore the requirement to record the bonds’ debt and equity components separately. (a) Calculate diluted earnings per share for the year ended...
6. Earnings per Share with Convertible Bonds On January 1, 2019, Houston Company issued, at par,...
6. Earnings per Share with Convertible Bonds On January 1, 2019, Houston Company issued, at par, 600 $1,000 6% bonds. Each bond is convertible into 10 shares of common stock. Houston’s net income for 2019 was $600,000. The tax rate was 20%. Throughout 2019, 100,000 shares of $10 par common stock were outstanding. In addition, 1,000 shares of 5% $100 par cumulative preferred stock were outstanding. No preferred stock dividends were declared during 2019. None of the bonds were converted...
On January 1, 2016, Blossom Company issued 10-year, $ 104,000 face value, 6% bonds at par...
On January 1, 2016, Blossom Company issued 10-year, $ 104,000 face value, 6% bonds at par (interest payable annually on January 1). Each $ 1,100 bond is convertible into 32 shares of Blossom $2 par value common stock. The company has had 11,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2017. Blossom also has adopted a stock-option plan that granted options to key...