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1: The following data is for Dunbar Company for 2016. Net Income (30% tax rate)                              &

1: The following data is for Dunbar Company for 2016.

Net Income (30% tax rate)                                 $3,200,000

Common Shares                                                        Change      Cumulative

Jan. 1, 2016, Beginning number                                                        1,000,000 shares

Mar. 1, 2016, Purchase of treasury shares               (60,000)          940,000

June 1, 2016, Stock split 2-1                                      940,000           1,880,000

Nov. 1, 2016, Issuance of shares                              120,000           2,000,000 shares

    

9% Cumulative Convertible Preferred Stock: $1,000,000   dividend rate = 9%*$1,000,000 = $90,000

     Sold at par, convertible into 200,000 shares of common (adjusted for split).

    

Stock Options: 60,000 options granted in 2010.

Exercisable (1 for 1) at an option price of $25 per common share. Average market price in 2016, $30 (adjusted for split).                                             

Required:        a) Determine BEPS                                        b) Determine DEPS

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Answer #1

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А 01-Jan Outstanding 01-Mar Repurchase(60000*5/6) 1,000,000 -50,000 950,000 1900000 20,000 1,920,000 01-Jun 2-for-1 split(950

B.Computation of the Basic earnings per share for the year Basic earning Per share= =Net income-Preference dividend /Weighted

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