Multiple Choice
Baker Instruments reported $7,000,000 in net income for the current year. The company had $500,000 of 10% cumulative, non-convertible preferred stock outstanding all year, and issued $1,000,000 of 6% convertible bonds on June 1. Determine the numerator for both basic and diluted EPS when the tax rate is 40%.
A) basic EPS $7,000,000 - $50,000; diluted EPS $7,000,000 - $50,000 + ($60,000 × 5/12) (1 - .40)
B) basic EPS $7,000,000 - $50,000; diluted EPS $7,000,000 - $50,000 + ($60,000 × 7/12) (1 - .40)
C) basic EPS $7,000,000 - $50,000 (7/12) ; diluted EPS $7,000,000 - $50,000 (7/12) + ($60,000 × 7/12) (1 - .40)
D) basic EPS $7,000,000 - $50,000 (5/12) ; diluted EPS $7,000,000 - $50,000 (5/12) + ($60,000 × 5/12) (1 - .40)
Correct Answer:
Verified
Correct Answer:
Verified
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