Response to the following problem:
On January 1, 2012, Lindsey Company issued 10-year, $3,056,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 21 shares of Lindsey common stock. Lindsey's net income in 2013 was $315,000, and its tax rate was 40%. The company had 103,000 shares of common stock outstanding throughout 2012. None of the bonds were converted in 2012.
(a) Compute diluted earnings per share for 2012. (Round answer to 2 decimal places, e.g. $2.55.)
(b) Compute diluted earnings per share for 2012, assuming the same facts as above, except that $1,030,000 of 6% convertible preferred stock was issued instead of the bonds.
Each $100 preferred share is convertible into 5 shares of Lindsey common stock. (Round answer to 2 decimal places, e.g. $2.55.) .