Earnings per share
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Wagnell's had 50,000,000 shares of common stock outstanding at January 1, 2004. On October 1, 2004, an additional 12,000,000 shares of common stock were issued for cash. Wagnell also bad $400,000,000 of 10% convertible bonds outstanding throughout 2004. The bonds were convertible into 250 common shares for each $1,000 bond lot. Wagnell's net income for the year ended December 31, 2004 is $250,000,000 and uses a tax rate of 40%.
Required:
Compute the basic and diluted earnings per share for the year ended December 31, 2004. Show aU computations.
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Solution Summary
The solution explains how to calculate the basic and diluted earnings per share.
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We first find the weighted average shares.
The weighted average shares are
50,000,000 X 9/12 - there was an addtional issue on October 1
62,000,000 X 3/12 - 12 million addtional shares were issued on october 1
The ...
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