Question

During 2016, Pete, Inc. had the following convertible securities outstanding: $220,000 of 10%, $100 par, cumulative...

During 2016, Pete, Inc. had the following convertible securities outstanding:

  1. $220,000 of 10%, $100 par, cumulative preferred stock. Each share is convertible into 5 shares of common stock.
  2. $200,000 of 9.5% convertible bonds. Each $1,000 bond is convertible into 45 shares of common stock.
  3. $100,000 of 8% convertible bonds. Each $1,000 bond is convertible into 32 shares of

common stock.

D.     $150,000 of 11%, $100 par, cumulative preferred stock. Each share is convertible into 5 shares of common stock.

Pete, Inc. has an income tax rate of 40%. Its reported net income for 2016 was $88,000, and it had 22,000 shares of common stock outstanding all year.

Required:

Calculate basic and diluted earnings per share for Pete.

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