Baker Instruments Reported $7,000,000 in Net Income for the Current

question 58

Multiple Choice

Baker Instruments reported $7,000,000 in net income for the current year. The company had $500,000 of 10% cumulative, non-convertible preferred stock outstanding all year, and issued $1,000,000 of 6% convertible bonds on June 1. Determine the numerator for both basic and diluted EPS when the tax rate is 40%.

• A) basic EPS $7,000,000 - $50,000; diluted EPS $7,000,000 - $50,000 + ($60,000 × 5/12)(1 - .40)
• B) basic EPS $7,000,000 - $50,000; diluted EPS $7,000,000 - $50,000 + ($60,000 × 7/12)(1 - .40)
• C) basic EPS $7,000,000 - $50,000 (7/12); diluted EPS $7,000,000 - $50,000 (7/12) + ($60,000 × 7/12)(1 - .40)
• D) basic EPS $7,000,000 - $50,000 (5/12); diluted EPS $7,000,000 - $50,000 (5/12) + ($60,000 × 5/12)(1 - .40)

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Definitions:

Job-Order Costing

An accounting method that tracks costs individually for each job, suitable for bespoke or custom work.

Job-Order Costing

An accounting method that assigns costs to specific batches or job orders, tracking the expenses of each job separately.

T-Account

This is an informal term for a ledger account that depicts the credit and debit sides of transactions, used in accounting to organize financial data.

Work in Process

Inventory that includes goods partially completed but not yet ready for sale.