The Following Information Has Been Provided to You by the Rae

question 6

Multiple Choice

The following information has been provided to you by the Rae Corporation for the year ending December 31,2015:
• Net income was $979,000.
• Cash dividends totaling $120,000 were paid to the common shareholders.
• 6% convertible bonds with a par value of $2,000,000 were issued on February 1,2015.
• The corporation's marginal income tax rate is 40%.
• 6% convertible preferred stock with a par value of $800,000 was outstanding during the entire year.
Assuming that both the bonds and preferred stock are dilutive,what is the numerator that should be used in the calculation of basic earnings per share and diluted earnings per share?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Misspelled Name

An error in the way a person's name is spelled on a document or in a database, which can lead to issues or confusion.

Endorse

To sign the back of a financial document or to publicly support a product, candidate, or policy.

Actual Name

The legal name under which an individual or entity is registered for official purposes.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often accompanied by a general disdain for other cultures.