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Sagot :
Answer:
A-1 Basic earnings per share=$1,353,750
A-2 Diluted earnings per share = 2,136,650
B-1 Basic earnings per share $1,491,000
B-2 Diluted earnings per share= $1,510,200
Explanation:
(a)Calculation of number of shares to be used for calculating
(1) Basic earnings per share = (876,000*3/12) + (1,513,000*9/12)
Basic earnings per share=$219,000+$1,134,750
Basic earnings per share=$1,353,750
Therefore Basic earnings per share is $1,353,750
(2) Diluted earnings per share = (876 000*3/12) (1,513,000*3/12) + (1,513,000 + ($600000/$1000 * 44)
Diluted earnings per share =219,000+378,250+(1,513,000+26,400)
Diluted earnings per share =219,000+378,250+1,539,400
Diluted earnings per share = 2,136,650
Therefore Diluted earnings per share is 2,136,650
(b) Calculation of earnings figures to be used for
(1) Calculation to determine the Basic earnings per share
Using this formula
Basic earnings per share = Net income after tax
Let plug in the formula
Basic earnings per share= $1,491,000
Therefore Basic earnings per share is $1,491,000
(2) Calculation to determine Diluted earnings per share
First step is to calculate the interest expense after tax adjustment
Interest Savings ($600000 * 8% * ½) $24000
Additional Tax ($24000 * 20%) $4800
Interest expense after tax adjustment $19,200
Now let calculate the Diluted earnings per share
Using this formula
Diluted earnings per share = Net income + interest expense after tax adjustment
Let plug in the formula
Diluted earnings per share= $1,491,000 +$19,200
Diluted earnings per share= $1,510,200
Therefore Diluted earnings per share is $1,510,200
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