The Mazur Company has accumulated the following information relevant to it 2009 earnings per share.
1. Net income for 2009 is $150,500.
2. Bonds payable: On January 1, 2009, the company had issued 10%, $200,000 bonds at 110. The premium is being amortized in the amount of $1,000 per year. Each $1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted.
3. Bonds payable: On December 31, 2007, the company had issued $540,000 of 5.8% bonds at par. Each $1,000 bond is currently convertible into 12 shares of common stock. To date no bonds have been converted.
4. Preferred stock: On July 3, 2008, the company had issued 3,800 shares of 7.5%, $100 par, preferred stock at $108 per share. Each share of preferred stock is currently convertible into 3 shares of common stock. To date, no preferred stock has been converted and no additional shares of preferred stock have been issued. The current dividends have been paid.
5. Common stock: during 2009, an average of 33,333 shares of common stock were outstanding.
6. Compensatory share options: Options to acquire common stock at a price of $33 per share were outstanding during all of 2009. Currently, 4,000 shares may be acquired. To date, no options have been exercised.
7. Miscellaneous: Stock market prices on common stock averaged $41 per share during 2009. The corporate income tax rate is 30%.
Required:
1. Using the 4-step process discussed in class, compute the basic and, if required, the diluted earnings per share to be reported on the 2009 income statement. Using Excel, construct all necessary schedules to support your answers.