Question

need help with b

on) In 2019, Orole disse 540,000 of bondspar, with each $1,000 bond being convertit 100 common shares. The company had revenues of $75,700 and expenses of $44.600 for 2020, not including wrest e sw etaxate of 25). Throughout 2020, 1.800 common shares were outstanding, and one of the bonds were converted ord edor o ty, that the convertible bondeguim ent is not recorded) Your income Ty Calce d earnings per har for the year ended December 31, 2020. Round answe 2 decimal places Deted camins per shares 15.25) Atems of use (b) You cometry A that the n e 31, 2020. (Round answer to ed on October decimal places 2020 1.25) 2019, and that one have been converted or redeemed. Calculate diluted earnings per share for the year ended Decebe dài 4 |

Answer 1

A
	Revised Earnings on conversion of Bond
	Revenues	$76,700
	Expenses	$44,600
	PBT	$32,100
	Tax	$8,025
	PAT (A)	$24,075
	Dilued EPS
	Net Income	$24,075
	No of shares o/s	1,800
	No of shares on conversion of bond
	(40,000$/1000)*100	4,000
	Total no of shares (B)	5,800
	Diluted EPS (A)/(B)	4.15
	Diluted EPS =	Net Income + After Tax Cost of interest
		Shares Outstanding + Addnl shares on conversion of bonds
B
	Diluted EPS      =	Net Income + After Tax Cost of interest
		Shares Outstanding + Addnl shares on conversion of bonds
	=	24,075$ + ((40,000$*8%)*3/12*)*75%
		1800 + 4000 * 3/12
	=	24075$ + 600$
		1800 + 1000
	=	8.81