Information for ABC Co:
12/31/2015 12/31/2014
Common shares Outstanding 100,000 100,000
Convertible preferred stock [$10 Par Value; convertible into 32,000 shares of common stock] $120,000 $120,000
10% Convertible bonds (convertible into 30,000 shares of common stock)
$1,000,000
$1,000,000
ABC's net income for the year ended 12/31/15 is $500,000. The income tax rate is 40%. ABC paid dividends of $5 per share on its preferred stock during 2015. There were no actual conversions of preferred stock or bonds during the year. Both the Convertible Preferred stock and Convertible Bonds were issued at Par Value.