Question

Testbank Problem 145 Sandhill Corp. had $750,000 net income in 2021. On January 1, 2021 there were 200,000 shares of common stock outstanding. On April 1, 23,200 shares were issued and on September 1, Sandhill bought 29,400 shares of treasury stock. There are 28,000 options to buy common stock at $40 a share outstanding. The market price of the common stock averaged $50 during 2021. The tax rate is 40%. During 2021, there were 41,000 shares of convertible preferred stock outstanding. The preferred is $100 par, pays $3.50 a year dividend, and is convertible into three shares of common stock. Sandhill issued $2,000,000 of 8% convertible bonds at face value during 2020. Each $1,000 bond is convertible into 30 shares of common stock. Complete the schedule and compute diluted earnings per share for 2021. (Round EPS answers to 2 decimal places, e.g. 52.75 and other answers to 0 decimal places, e.g. 5241. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Security Net Income Adjustment Adjusted Net Income Shares Adjustment Adjusted Shares EPS Common Stock $ $ $ $ Options Bonds Preferred

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4G 2:01 PM 2.6KB/S MEG, ull 8 ) + Untitled spreadsheet.pdf : EPS Security Common stock Options Bonds Preferred stock Net Income Adjustment Adjusted net income $750,000.00 $143,500.00 $606,500.00 $606,500.00 $606,500.00 $96,000.00 $702.500.00 $702,500.00 $143,500.00 $846,000.00 Shares 200000 210500 216100 Adjustment Adjusted Shares 10500 210500 5600 216100 60000 276100 123000 399100 2.88 2.81 2.54 2.12 276100 a) adjustment in net income of common stock net income - preferred dividend 750000-143500 $606,500.00 b) adjustment in common stock 23200*9/12 29400'3/12 17400 -7,350 10,050 c) adjustment in options total option converted into stock paid portion 28000 40/50 28000 -22,400 5,600 d) adjustment in net income of Bonds 2000000*.08*.6 $96,000.00 $96000/60000 = 1.6 $143500/123000 =1.17