com x M Chapter 109-5-17.pdf ?? ? The l n dílu education onnect.htmml e 5 - Summ
ID: 2396154 • Letter: C
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com x M Chapter 109-5-17.pdf ?? ? The l n dílu education onnect.htmml e 5 - Summer 2018-Section 01 7.3/10 Total points awerded Help Exit 6 Prince Corp. has the following balance sheet information at December 31, 2018 Current liabilities Convertible bonds ($1,000 par, 7) Common stock ($1 par, 108,e00 shares issued) Retained earnings Treasury stock (9,888 shares) Total liabilities and shareholder's equity $ 545,808 4,800,e0e 180,880 1,800,8e0 dng Additional paid-in capital 368,880 $7,285,eee The convertible bonds were issued at par on April 1, 2018 and are convertible into Prince's common stock at a ratio have any treasury stock at December 31, 2017 and of 25 shares of stock to 1 bond. Prince did not the 9,000 shares evenly throughout 2018. The average price of the common stock for the year was 0, and the year-end price was $45 Prince Corp. also has 60.000 outstanding and exercisable qualifed employee stock options. Employees obtain one share of s rcise price for each option is $21 per share Prince's net income for the year ended 2018 was $292.500. Its tax rate for the year was 3 Required: 1. Compute basic EPS for the year ended December 31, 2018. Show all computations 2. Compute diluted EPS for the year ended December 31, 2018. Show all computations 1. 292,500Explanation / Answer
Solution:
In computation of EPS we divide earning available for common shareholders by weighted average outstanding shares.
In the present case, company is not having outstanding treasury stock on December 31, 2017 and 9000 shares in treasury stocks were purchased evenly throughout the period. In order to calculate weighted average outstanding share, weighted average nos of treasury stock should be reduced from total shares issued.
Therefore weighted average outstanding treasury shares through out the period = 9000 / 2 = 4500 shares
That's why 9000 shares divided by 2 in order to calculated weighted average outstanding shares.
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