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Dooley Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 10% convertible bonds outstanding during 20A1. The preferred stock is convertible into 40,000 shares of common stock. During 20A1, Dooley paid dividends of $1.20 per share on the common stock and $3.00 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 20A1 was $600,000 and the income tax rate was 30%.

Calculate the basic earnings per share for 20A1 (rounded to the nearest cent).

Answer :

Basic earnings per share for 2015 is (rounded to the nearest penny) = 300,000 - (20,000 * 1.5) / 200,000 = 1.35

Diluted earnings per share for 2015 is (rounded to the nearest penny) = 300,000 + (500,000 .1 .7) / 200,000 + 22,500 + 40,000 = 1.28

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