Rockland Corporation earned net income of $346,500 in 2012 and had 100,000 share
ID: 2505186 • Letter: R
Question
Rockland Corporation earned net income of $346,500 in 2012 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $924,000 of 10% bonds, which are convertible into 18,480 shares of common. Rockland's tax rate is 40 percent. Compute Rockland's 2012 diluted earnings per share. (Round answer to 2 decimal places, e.g. 2.13.)
Rockland Corporation earned net income of $346,500 in 2012 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $924,000 of 10% bonds, which are convertible into 18,480 shares of common. Rockland's tax rate is 40 percent. Compute Rockland's 2012 diluted earnings per share. (Round answer to 2 decimal places, e.g. 2.13.)Explanation / Answer
Calculation of Diluted Earnings per share Net Income $ 346,500.00 Add: interest saving on bonds (net of tax) 924000*10%(1-0.4) $ 55,440.00 Diluted Earnings $ 401,940.00 Total shares (100,000+18,480) 118480 Diluted earnings per share $ 3.39
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