Compute diluted earnings per share for 2017.

Anonymous

Question description

Exercise 16-25

On January 1, 2017, Ayayai Company issued 10-year, \$2,090,000 face value, 6% bonds, at par. Each \$1,000 bond is convertible into 14 shares of Ayayai common stock. Ayayai’s net income in 2017 was \$311,000, and its tax rate was 40%. The company had 101,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017.

(a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. \$2.55.)

 Diluted earnings per share \$

(b) Compute diluted earnings per share for 2017, assuming the same facts as above, except that \$1,010,000 of 6% convertible preferred stock was issued instead of the bonds. Each \$100 preferred share is convertible into 5 shares of Ayayai common stock. (Round answer to 2 decimal places, e.g. \$2.55.)
 Diluted earnings per share \$

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