A company had a net loss of $ 80,000 in 2019. The company has cumulative preferred...

A company had a net loss of $ 80,000 in 2019. The company has cumulative preferred shares corresponding to an annual dividend of $ 20,000. However, in 2019, the company did NOT declare dividends. The average number of common shares outstanding for 2019 was 40,000. The company will present in its statement of income and expenses:

a. Basic loss per share $ 2.00 and diluted loss per share $ 2.50

b. Basic loss per share $ 2.00 and diluted loss per share $ 1.50

c. Basic loss per share of $ 2.50 and there is no diluted loss.

d. Basic loss per share of $ 1.50 and there is no diluted loss.

Suppose the cumulative preferred shares in the previous question were issued in 2017 and are convertible into 10,000 common shares. The company will present in its statement of income and expenses:

a. Basic loss per share $ 2.50 and diluted loss per share $ 1.60

b. Basic loss per share $ 1.50 and diluted loss per share $ 1.60

c. Basic loss per share of $ 2.50 and there is no diluted loss.

d. Basic loss per share of $ 1.50 and there is no diluted loss.

Expert Solution

ekkarill92 answered 1 year ago

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