Question - Taylor Company has 20,000 shares of common stock outstanding during all of 2014. It also has convertible outstanding at the end of 2014. These are:
-Convertible preferred stock, 1000 share of 6% $100 par that was issued on Jan 2, 2014 for $105 per share. Each share is convertible into 6 shares of common stock. Dividends were declared on December 15, 2014. No preferred stock was converted
-Convertible bonds, with a face of $100,000 and interest rate of 8% were issued in 2013. Each 1,000 bond is convertible into 20 shares of common stock. No bonds have been converted.
Taylor had a net income of $100,000 for 2014 and their income tax rate is 30%.
Compute basic and diluted earnings per share. Do not worry about ranking order or dilutive securities.