Use the Following Information for Questions 117 and 118

question 156

Multiple Choice

Use the following information for questions 117 and 118.
Lerner Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $500,000 of 10% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Lerner paid dividends of $.45 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2015 was $300,000 and the income tax rate was 30%.
-Basic earnings per share for 2015 is (rounded to the nearest penny)

• A) $1.11.
• B) $1.21.
• C) $1.25.
• D) $1.35.

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Definitions:

Unlimited Liability

A legal concept where business owners are personally responsible for all of the company's debts and liabilities, without any limit on the amount for which they could be liable.

Management Conflict

Refers to disagreements or disputes among managers or between management and employees in a workplace, often due to differences in opinions, objectives, or approaches.

Less Independence

Referring to a decrease in freedom or autonomy in making decisions or carrying out actions without reliance on others.

Joint Venture

An agreement in which two businesses form a temporary partnership to produce a product or service in a market that neither could satisfy alone.