Terrell Foods Reported $910,000 in Net Income (Not Considering Interest

question 74

Multiple Choice

Terrell Foods reported $910,000 in net income (not considering interest expense) and its weighted-average shares outstanding for the year is 100,000 shares. In prior years it sold $1,500,000 of 8% long-term convertible bonds at par which are still outstanding at the start of the year. The bonds are convertible into 50,000 shares of common stock. The tax rate for all years is 40%. Bondholders convert the bonds on July 1 of the current year. If Terrell has no other potentially dilutive securities and no preferred stock, what are basic and diluted EPS? (Round your final answers to the nearest cent.)

• A) basic EPS $6.99 diluted EPS $6.07
• B) basic EPS $5.83 diluted EPS $6.99
• C) basic EPS $6.07 diluted EPS $5.83
• D) basic EPS $5.83 diluted EPS $5.83

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Definitions:

Semipermeable

Characteristic of a membrane that allows certain substances to pass through it while blocking others.

Depolarization

A decrease in the difference in electrical charge across a cell membrane, making the inside of the cell less negative compared to the outside.

Sodium Ions

Positively charged atoms (Na+) that play crucial roles in physiological processes, including nerve impulse transmission and muscle contraction.

Physiological Relaxation

A state in which the body is not in alert mode, often characterized by reduced tension and stress, and an increased feeling of calm.