Complete the following problem. You must show all computations to receive full credit.
For each potentially dilutive security separately show the effect on both the numerator and denominator.
The tax rate is 20%.
Colson Corp. had a $940,000 net income for 2022.
On January 1 there were 200,000 shares of common stock outstanding.
On April 1, 20,000 shares were issued.
On October 1, Colson bought 30,000 shares of treasury stock.
On December 1, there was a 2-for-1 stock split.
The following are outstanding all year:
30,000 options to buy common stock at $40 a share outstanding. The market price of the common stock averaged $50 for the year.
4% $100 par value convertible preferred stock (30,000 shares outstanding) $3,000,000
Each share is convertible into three shares of common stock.
8% convertible bonds. $2,000,000
Each $1,000 bond is convertible into 30 shares of common stock.
Compute basic and diluted earnings per share. Show all computations.