On January 1, 2020, Cullumber Inc. issued $2.4 million of face value, five-year, 8% bonds at par. Each $1,000 bond is convertible into 15 common shares. Cullumber’s net income in 2020 was $240,000, and its tax rate was 30%. The company had 100,000 common shares outstanding throughout 2020. None of the bonds were exercised in 2020.
Compute diluted earnings per share for 2020.
Financial statement data for the years ended December 31 for Dovetail Corporation follow:
| 20Y3 | 20Y2 | |
| Net income | $510,500 | $452,000 |
| Preferred dividends | $78,000 | $78,000 |
| Average number of common shares outstanding | 50,000 shares | 40,000 shares |
a. Determine the earnings per share for 20Y3 and 20Y2.
b. Does the change in the earnings per share from 20Y2 to 20Y3 indicate a favorable or an unfavorable trend?
BB Corporation has 200,000 shares of $5 par common stock issued and outstanding. BB Corporation also has 50,000 shares of $100, 5% par cumulative preferred stock. In 2017, BB had net income of $3,000,000. The number of shares of both common and preferred stock has not changed during the year, and the preferred stock dividends were paid at the end of 2017. What are the common earnings per share (EPS) for 2017?
A. $14.00
B. $14.20
C. $12.80
D. $13.75
