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The following applies to the ABC Corp for 2010:

1. The following applies to the ABC Corp for 2010:
Shares
Transactions in Common Shares Change Outstanding

1/1/10, Beginning Shares Outstanding 1,000,000
3/1/10, Purchase of Treasury Shares (60,000) 940,000
6/1/10, Stock Split 2-for-1 940,000 1,880,000
11/1/10, Issuance of Additional Shares
120,000 2,000,000

Outstanding Stock Options (Granted in 2008)

Options for 60,000 shares exercisable at the option price of $25 per share. Average 2010 market price was $30 per share. (Market price and option price already adjusted for stock split).

Convertible Bonds (Issued December 1, 2010)

$5 million of 4% bonds convertible to 400,000 shares of common stock.

Net income in 2010 was $3,200,000. ABC’s tax rate is 35%

A) Compute the basic earnings per share for 2010.
B) Compute the diluted earnings per share for 2010.
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Dear Student Please find... View the full answer

Accounting-8097549.xls

A)
Net Income
Outstanding shares
Basic EPS Basic EPS
3,200,000
2,000,000
1.60 B)
If Bonds are converted into shares, then there will be no interest payment to bondholders
Net Income
Add: Post tax...

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