Question

PRINTER VERSION BACK NEXT Exercise 17-9 (Part Level Submission) In 2019, Carla Vista Utd, issued $50,000 of 9% bonds at par, with each $1,000 bond being convertible into 100 common shares. The company had revenues of $70,100 and expenses of $36,100 TO 2020, not including interest and taxes (assume a tax rate of 20%). Throughout 2020, 1,800 common shares were outstanding, and none of the bonds were converted or redeemed. (For simplicity, assume that the convertible bonds' equity element is not recorded.) (a) Calculate diluted earnings per share for the year ended December 31, 2020. (Round answer to 2 decimal places, e.g. 15.25.) Diluted earnings per share $ LINK TO TEXT Attempts: 0 of 3 used SAVE FOR LATER SUUMIT ANSWER The parts of this question must be completed in order. This part will be available when you complete the part above.

Answer 1

Carte Vista Ltd Revenue Expenses Interest (50000@9%) 70400 36400 4500 29500 5900 23600 Taxes (20%) Net Income 1800 5000 Common Shares Bonds Converted to Shares (as per working) Total Shares 6800 Diluted EPS Net Income +After tax cost of interest Total No of share 27200 6800 4.00 Working No of Convertible Bonds= 50000 1000 50*100 Converted into shares 5000