Ahnberg Corporation had 800,000 shares of common stock issued and outstanding at

Question

Ahnberg Corporation had 800,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1 Ahnberg issued 100,000 shares of convertible preferred stock. The preferred shares are convertible into 200,000 shares of common stock. During the year Ahnberg paid $60,000 cash dividends on the preferred stock.

Net income was $1,500,000. What were Ahnberg's basic and diluted earnings per share for the year?

Net income was $1,500,000. What were Ahnberg's basic and diluted earnings per share for the year?

Explanation / Answer

basic EPS=(NI-Preffered share dividend)/total share outstanding=1.8

Diluted EPS=(NI/total share outstanding)=1.5

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