During the Current Year, High Corporation Had 3 Million Shares

question 173

Multiple Choice

During the current year, High Corporation had 3 million shares of common stock outstanding. Five thousand $1,000, 6% convertible bonds were issued at face amount at the beginning of the year. High reported income before tax of $4 million and net income of $2.4 million for the year. Each bond is convertible into 10 shares of common. What is diluted EPS (rounded) ?

• A)$.85.
• B)$.86.
• C)$.80.
• D)$.79.

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Definitions:

Disaffirm

The legal act of rejecting or voiding a contract or agreement, especially by a party who was not at full capacity when the agreement was made.

Property

Refers to legally recognized ownership of resources such as land, buildings, goods, or intellectual property.

Understand

The ability to grasp the meaning, significance, or nature of something.

Avoid

To stay away from or prevent the occurrence of a situation or condition.