Question

Lakeview Corporation had 100,000 shares of common stock outstanding and 200,000 shares of 10% preferred stock that are convertible into 150,000 common shares. Net income for the current year was $500,000 with a 25% tax rate. What is the amount of the diluted EPS for the current year?

Answer 1

• What is the amount of the diluted EPS for the current year?

Diluted EPS $2,00

Step-by-step explanation:

Diluted EPS is calculated by dividing the net income of the company by the potential Total Common Shares of the company, in this case the total outstanding common shares plus the total convertible preferred stock into 150,000 common shares, totaled 250,000 Common Shares.

100,000 Common Shares

150,000 Preferred Stock as Common

250,000 Total Common Potential Shares

$500,000 Net income

$2,00 Diluted EPS