During 20X6, ZZZ Corp. reported net income of $115,600 and had 200,000 shares of common stock outstanding for the entire year. ZZZ also had 1,000 shares of 10% $100 par, preferred stock outstanding during 20X6. During 20X5, ZZZ issued 600, $1,000 par, 7% bonds for $600,000 (issued at par). Each of these bonds is comvertible to 100 shares of common stock. The tax rate is 40%.
Compute the 20X6 basic and diluted EPS.
Question?) If ZZZ had issued the 600, $1,000 par, 7% bonds for $600,000 in 20X6 instead of 20X5, would you have needed to add the $600,000 to the numerator (net income available to common shareholders)?
