Austin Products Reported $350,000 Net Income for the Year with 100,000

question 69

Multiple Choice

Austin Products reported $350,000 net income for the year with 100,000 outstanding common shares all year.Austin issued 50,000 shares of $100,8% convertible preferred shares on March 1.Each preferred share is convertible into 10 shares of common stock.Determine the numerator for both basic and diluted EPS.

• A)basic EPS $350,000 - [(50,000 × $100 × 8%)(2/12)]; diluted EPS $350,000
• B)basic EPS $350,000 - [(50,000 × $100 × 8%)(2/12)]; diluted EPS $350,000 - (50,000 × $100 × 8%)
• C)basic EPS $350,000; diluted EPS $350,000
• D)basic EPS $350,000 - [(50,000 × $100 × 8%)(10/12)]; diluted EPS $350,000

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Definitions:

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Residual Value

The estimated value of an asset at the end of its useful life.

Present Value

Present value is a financial concept that calculates the current worth of a future sum of money or stream of cash flows, given a specific rate of return.

Cash Inflows

The total amount of money received by a company from its operational activities, investments, and financing.