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Computation of EPS

Woolery, Inc. had 50,000 shares of common stock outstanding at January 1, 2006.
On March 31, 2006, an additional 12,000 common shares were sold for cash.
Woolery also had $4,000,000 of 6% convertible bonds outstanding throughout the year. The bonds are convertible into 40,000 shares of common stock.
Net income for the year was $350,000. The tax rate is 35%.

Required: Compute basic earnings per share and diluted earnings per share for the year ended December 31, 2006.

Solution Summary

Calculation of Woolery, Inc. EPS (basic and diluted)