Question

Computing EPS: Convertible Preferred with Partial Conversion

Bridgeman Company, headquartered in San Francisco, reported the following data for the current year.

• Net income, $2,220,000.
• Common shares outstanding at the beginning of the year, 800,000.
• Nonconvertible cumulative preferred stock, $100 par, $8 dividend per share per year, 100,000 shares outstanding all year.
• Issued 200,000 shares of common stock on October 1.
• Convertible cumulative preferred stock, $100 par, $7 dividend per share per year, 50,000 shares outstanding at the beginning of the year. On March 31, 20,000 shares of preferred stock converted to 40,000 common shares.
• For both preferred stock issues, assume dividends are paid for time held.

Note: In the following calculations, round earnings per share amounts to two decimal places.

a. Compute basic EPS.

b. Compute diluted EPS.

	Net Income Available to Common Stockholders	Weighted Avg. Common Shares Outstanding	Per Share
Basic EPS	Answer	Answer	Answer
Diluted EPS	Answer	Answer	Answer

Answer 1