Hemington Company: Compute basic and diluted EPS
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At December 31, 2011, Hemington Company had 320,000 shares of common stock outstanding. Hemington sold 80,000 shares on October 1, 2012. Net income for 2012 was $1,985,000; the income tax rate was 35%. In addition, Hemington had the following debt and equity securities on its books at December 31, 2011.
a) 30,000 shares of $100 par, 8% cumulative preferred stock.
b) 25,000 shares of 10% convertible cumulative preferred stock, par $100, sold at 110. Each share of preferred stock is convertible into three shares of common stock
c) $1,500,000 face value of 9% bonds sold at par
d) $2,500,000 face value of 7% convertible bonds sold to yield 8%. Unamortized bond discount is $150,000 at December 31, 2011. Each $1,000 bond is convertible into 22 shares of common stock.
Also, options to purchase 20,000 shares of common stock were issued May 1, 2012. Exercise price is $20 per share; market value at date of option was $19; ending market value on December 31, 2012, $25.
Instructions:
For the year ended December 31, 2012, Compute basic and diluted EPS
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Solution Summary
The expert computes basic and diluted EPS for Hemington Company.
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