Question

Current Attempt in Progress In 2019, Bonita Enterprises issued, at par, 60 $1,000,8% bonds, each convertible into 100 shares of common stock. Bonita had revenues of $18,700 and expenses other than interest and taxes of $8,300 for 2020. (Assume that the tax rate is 20%.) Throughout 2020, 2,000 shares of common stock were outstanding; none of the bonds was converted or redeemed. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $ (b) Assume the same facts as those assumed for part (a), except that the 60 bonds were issued on September 1, 2020 (rather than in 2019), and none have been converted or redeemed. Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $ (c) Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2020. Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Earnings per share $

Answer 1

Solution :- Aajusted oet Income Diluted EPS = weighted AveNage number & shayes outstanding Amountin DOllays Revenues 13,T00 300 Less Epenses Bond Intevest L604s10000.0s 5,600 Income Befoxe Toxes Less' Inome Tax ($5,500 * 201.) 120) Net LNCOme Adjustes Nek gntome z Bond Inbexeskll- Tax Yote) +net vome - $3,9 ud +&u,o - ,320

weighbea Avevage So & 20b0 + 6000 shaxes otcbanding 19,320 Diluted EPs A.64 per share 3000 Amonnb in bDllars Revenues 12700 Less ExPenses 2,300) i600) Bond IntevestLboxsioo0 x0.08yl12) Lncome befoxe Taxes $2,200 Lesss Income Tax lš 9, 800 x 20. Neb Trncome

1,600 (1- 02 Adjnsted vet Tncome = $7,0uD -$7pho +$ \290 320 welghtea Aueyage No. & 2000 6O00 % Shaves owtctanding = 2000 +2000 $,320 Di1uted E PS 0 pev shave

Amount in Dollays Revenues 1TOO 1300 Less'.- Expenses $2400 Bond InteyestC60y$ioo0.084 2 Bons ntevesk Lbp+$1000y0 08 4V2 600) Tncome efove TOXLS Lessncome Tols6400 x201 SS120 Net n COme Adjusted wet Tnome - S,20 4 ( 2;400 $1,600) (1-0:2) -$520 4 $3200 - ,320 weignted Avexoge no. 2000 +20004 ho o Sharer oubstanding 2000-+ l600 +4000 + 100O

A DIluted EPS 8,320 $81000 1.Du peY Shoye suminayy y DIlute.L EPS -1.ou Pey share - 2008 Pey share DIted EPS - 4 OM pes shaxe DIlnted E PS
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