Earnings per Share with Actual Conversion
Atlas, Inc., has the following capital structure at January 1, 2008.
|
|
Outstanding |
|
Common stock, $10 par |
800,000 shares |
|
11% stated interest rate convertible bonds issued at par; |
|
|
each $1,000 bond is convertible into 80 shares of common stock |
$5,000,000 |
During 2008,Atlas had the following stock transactions:
May 1 Issued 50,000 shares of common stock for $30 per share.
Aug. 1 Purchased 100,000 shares of treasury stock at $35 per share.
Oct. 1 Converted $2,000,000 of bonds.
Net income for 2008 was $950,000. The income tax rate was 30%. Compute basic and diluted EPS for Atlas for 2008.