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Last year, East Corporation reported basic and diluted EPS in an amount less than basic EPS...

Last year, East Corporation reported basic and diluted EPS in an amount less than basic EPS due to outstanding stock options. Those options were excercised on January 1 of the current year.

During the current year, East Corporation had 15.0 million shares of common stock outstanding. Three thousand eight hundred 10% convertible bonds, each with $1,000 face value, were issued at face amount at the beginning of the year. East reported net income of $3.8 million for the year. Each bond is convertible into 10 shares of common stock. The tax rate is 25%. What is diluted EPS (rounded)? (Round your answer to 2 decimal places. Do not round your intermediate calculations.)

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Answer #1
Particulars $
Numerator
Net Income $       3,800,000
Add Post tax Interest on convertible bonds $          285,000
Numerator for Diluted EPS $       4,085,000
Denominator for diluted EPS
Opening common stock outstanding         15,000,000
Add Common stock due to bond conversion                38,000
Denominator for diluted EPS         15,038,000
Diluted EPS (Numerator/ Denominator) $                0.27

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