Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
At December 31, 2019, Jack Russell Ltd
At December 31, 2019, Jack Russell Ltd. had 900,000 common shares outstanding (no preferred shares issued). On September 1, 2020, an additional 300,000 common shares were issued. In addition, Jack Russell had $10,000,000 (par value) 6% convertible bonds outstanding at December 31, 2019, which are convertible into 600,000 common shares. No bonds were converted in 2020. Net income for calendar 2020 was $3,750,000. Assuming the income tax rate is 30%, the diluted earnings per share for 2020 is
$3.75.
Expert Solution
Computation of Diluted Earning per Share:
Diluted Earning per Share = Net Income / No. of Shares Outstanding
Here,
Net Income = $3,750,000+$10,000,000*6%*(1-30%) = $3,750,000+$420,000 = $4,170,000
Number of shares outstanding if preferred shares converted = 900,000 + 300,000*4/12 + 600,000 = 1,600,000 shares
Therefore,
Diluted Earning per Share = $4,170,000/1,600,000 shares = $2.61
So, the correct option is 3rd "$2.61".
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
