Multiple Choice
Terrell Foods reported $680,000 in net income (not considering interest expense) and its weighted-average shares outstanding for the year is 100,000 shares. In prior years it sold $1,500,000 of 8% long-term convertible bonds at par which are still outstanding at the start of the year. The bonds are convertible into 40,000 shares of common stock. The tax rate for all years is 40%. Bondholders convert the bonds on July 1 of the current year. If Terrell has no other potentially dilutive securities and no preferred stock, what is the denominator for basic and diluted EPS?
A) basic 120,000; diluted 140,000
B) basic 100,000; diluted 140,000
C) basic 140,000; diluted 140,000
D) basic 100,000; diluted 120,000
Correct Answer:
Verified
Correct Answer:
Verified
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