Wildhorse Corporation has 350,000 shares of common stock outstanding throughout 2021. In addition, the corporation has...

Wildhorse Corporation has 350,000 shares of common stock outstanding throughout 2021. In addition, the corporation has 4,800, 20-year, 8% bonds issued at par in 2019. Each $1,000 bond is convertible into 20 shares of common stock after 9/23/22. During the year 2021, the corporation earned $742,000 after deducting all expenses. The tax rate was 30%.

Compute the proper earnings per share for 2021. (Round answer to 2 decimal places, 52.75.)

Expert Solution

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Wildhorse
Calculation of income after tax	Amount $	Note
Income before tax	742,000.00	A
Tax @ 30%	222,600.00	*B=A30%**
Income after tax	519,400.00	C=A-B

Basic earnings per share	Amount $	Note
Income after tax	519,400.00	See C
Number of common stock outstanding	350,000.00	D
Basic earnings per share	1.48	E=C/D

Number of bonds outstanding	4,800.00	F
Conversion rate	20.00	G
Number of common shares	96,000.00	*H=FG**
Add: Number of common stock outstanding	350,000.00	See D
Total Number of common stock outstanding	446,000.00	I=H+D

Diluted earnings per share	Amount $
Income after tax	519,400.00	See C
Number of common stock outstanding	446,000.00	See I
Diluted earnings per share	1.16	J=C/I

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