During the current year. Green Corp. had the following two classes of stock issu

Question

During the current year. Green Corp. had the following two classes of stock issued and outstanding for the entire year.

100,000 shares of common stock, $1 par

1,000 shares of 4% preferred stock, $100 par, convertible share for share into common stock. The stock is cumulative, whether or not earned, and no preferred dividends are in arrears.

Green's current-year net income was $900,000, and its income tax rate for the year was 30%. Diluted earnings per share for the current year are

$8.87

$8.91

$8.96

$9.00

Explanation / Answer

Net income                                900000

Less dividend                                 4000

                                                         896000

(1000 shares *100*4%)

Diluted EPS = 896000/(100000+1000) = 8.87

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.