Austin Products Reported $400,000 Net Income for the Year with 100,000

question 102

Multiple Choice

Austin Products reported $400,000 net income for the year with 100,000 common shares outstanding all year. Austin also had 60,000 shares of $100, 8% convertible preferred shares outstanding all year. Each preferred share is convertible into 10 shares of common stock. Determine the numerator for both basic and diluted EPS.

• A) basic EPS $400,000 - (60,000 × $100 × 8%); diluted EPS $400,000 - (60,000 × $100 × 8%)
• B) basic EPS $400,000 - (60,000 × $100 × 8%); diluted EPS $400,000
• C) basic EPS $400,000 - (60,000 × $100 × 8%); diluted EPS $400,000 + (60,000 × $100 × 8%)
• D) basic EPS $400,000; diluted EPS $400,000

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Definitions:

Potential Energy

Energy stored in the position or arrangement of a system’s components.

Kinetic Energy

The energy that an object possesses due to its motion.

Facilitated Diffusion

Passive transport mechanism in which a solute follows its concentration gradient across a membrane by moving through a transport protein.

Concentration Gradient

A variation in the concentration of a substance across a distance.