Terrell Foods Reported $950,000 in Net Income and Its Weighted

question 12

Essay

Terrell Foods reported $950,000 in net income and its weighted average shares outstanding for the year is 200,000 shares. In prior years it sold $1,000,000 of 8% long-term convertible bonds at par which are still outstanding. The bonds are convertible into 20,000 shares of common stock. The tax rate for all years is 40%. If Terrell has no other potentially dilutive securities and no preferred stock, and no conversions occur during the year, what are basic and diluted EPS? (Round your final answers to the nearest cent.)

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Definitions:

Finite Population Correction Factor

A factor applied in sample size formulae to adjust for the effect of sampling without replacement from a finite population.

Mean Salary

The average amount of money earned by employees in a specific job, industry, or region, calculated by summing all salaries and dividing by the number of employees.

Standard Error

An estimate of the statistical accuracy of an estimate, showing how much the sample mean is expected to vary from the true population mean.

Poker Time

A casual term possibly referring to a designated period dedicated to playing poker, not an established key term in a technical or academic sense.