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    Computation of EPS

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    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.

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    Solution Summary

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