Problem 1: Pina Inc. presented the following data.
Net income $2,740,000
Preferred stock: 45,000 shares outstanding, $100 par, 8% cumulative, not convertible 4,500,000
Common stock: Shares outstanding 1/17 14,000
Issued for cash, 5/12 91,600
Acquired treasury stock for cash, 8/11 35,600 2-for-1 stock split, 10/1
Required: Compute earnings per share.
Problem 2: The Sweet Corporation issued 10-year, $4,790,000 par, 7% callable convertible subordinated debentures on January 2, 2017. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in 2 years it will increase to 20:1. At the date of issue, the bonds were sold at 97. Bond discount is amortized on a straight-line basis. Sweet's effective tax was 40%. Net income in 2017 was $8,000,000, and the company had 2,015,000 shares outstanding during the entire year.
Required: Compute both basic and diluted earnings per share.
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