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Intermediate corp. has asked for your assistance with their earnings per share calculation for the year ended 12/31/2012. They provide you with the...

Intermediate corp. has asked for your assistance with their earnings per share calculation for the year ended 12/31/2012. They provide you with the following information. They had 500,000 shares of stock outstanding on 1/1/2012. The average market value of each share is $25 for 2012. Their net income for 2012 was $1,200,000 and their tax rate is 40%. On April 1 they issued 75,000 shares. On June 1 they acquired 37,500 shares from the open market to use as treasury stock. On November 1 they reissued (sold) 20,000 shares of their treasury stock.

Intermediate has 2,000 stock options outstanding for the entire year. Each option can be exchanged for one share of common stock at an exercise price of $20.

In addition, Intermediate has bonds which were issued at par with a face value of $2,000,000 and a 5% interest rate. The bonds were issued on June 30, 2012. Each $1,000 bond is convertible into 20 shares of Intermediate common stock.

Intermediate also has 40,000 shares of %6 convertible, cumulative preferred stock ($100 par value) which was outstanding for the full year. Each preferred share can be converted into 3 shares of common stock, No preferred dividends have been declared for the current year or the preceding 2 years.

Provide basic and diluted earnings per share calculation.
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8437245.xlsx

Solution:
No. of shares outstanding as on 1/1/2012
Average market value of shares
Net Income
Tax rate 500000
25
1200000
40% April 1 shares issued
June 1, treasury stock
Nov 1, treasury shares sold...

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