Baker Instruments Reported $6,000,000 in Net Income for the Current

question 6

Multiple Choice

Baker Instruments reported $6,000,000 in net income for the current year.The company had $500,000 of 10% cumulative,non-convertible preferred stock outstanding all year,and issued,$5,000,000 of 6% convertible bonds issued on June 1.Determine the numerator for both basic and diluted EPS when the tax rate is 40%.

• A)basic EPS $6,000,000 - $50,000; diluted EPS $6,000,000 - $50,000 + ($300,000 × 5/12)(1 - .40)
• B)basic EPS $6,000,000 - $50,000; diluted EPS $6,000,000 - $50,000 + ($300,000 × 7/12)(1 - .40)
• C)basic EPS $6,000,000 - $50,000 (7/12); diluted EPS $6,000,000 - $50,000 (7/12)+ ($300,000 × 7/12)(1 - .40)
• D)basic EPS $6,000,000 - $50,000 (5/12); diluted EPS $6,000,000 - $50,000 (5/12)+ ($300,000 × 5/12)(1 - .40)

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