112k views
11 votes
Jostens Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 10% bonds outstanding during 2017. The preferred stock is convertible into 20,000 shares of common stock. During 2017, Jostens paid endives of $1.20 per share on its common stock and $3.00 per share on its preferred stock. Each $1,000 bond is convertible into 30 shares of common stock. The net income for the year ended December 31,2017 was $80,000. Assume the income tax rate was 30%. Diluted earnings per share of 2017 (rounded to the nearest penny) are: Select one:

a. $3.64
b. $3.72
c. $3.36
d. $3.48
e. $3.22

User Nnattawat
by
8.3k points

1 Answer

3 votes

Answer:

$3.46 per share

Step-by-step explanation:

The computation of the diluted earning per share is shown below:

But before that the earning per share is

= ($800,000 - (20,000 shares × 3)) ÷ (200,000 shares)

= $3.70 per share

The diluted earning per share is

= ($800,000 - $60,000 + $60,000+ (1,000,000 × 10% ) × (1- 0.30)) ÷ (250,000 shares)

= $865,000 ÷ 250,000 shares

= $3.46 per share

This is the answer but the same is not provided in the given options

User Pradeek
by
7.9k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.