Problem
Portland Corp. is preparing earnings per share data for 2022. The net income for the year ended December 31, 2022, was $750,000. There were 60,000 common shares outstanding at the beginning of the year, and the company issued an additional 15,000 shares on August 1, 2022. The company also had a 2-for-1 stock split on November 1, 2022.
Masters has the following two convertible securities outstanding:
10% convertible bonds (each $1,000 bond is convertible into 50 common shares). $100,000
5% cumulative dividend, convertible $100 par value (each share is convertible into 10 common shares). $50,000
The bonds and preferred shares were issued at face value in 2019.
There were no conversions during 2022, and the income tax rate is 25%
• Calculate the basic EPS.
• Calculate the diluted EPS.