Question

Information relating to the capital structure of Parke Corporation is as follows:
` December 31
2008 2009
Outstanding shares of:
Common stock 90,000 90,000
Preferred stock, convertible into 30,000 shares of common 30,000 30,000
10% convertible bonds, convertible into 20,000 shares
Of common $1,000,000 $1,000,000

During 2009 Parke paid $45,000 dividends on the preferred stock, which is considered a common stock equivalent. The convertible bonds are not considered common stock equivalents. Parke’s net income for 2009 was $980,000 and the income tax rate was 40%.

10. For the year ended December 31, 2009, the primary earnings per share is:
a. $10.89
b. $10.39
c. $8.17
d. $7.79

11. For the year ended December 31, 2009, the fully diluted earnings per share is:
a. $9.82
b. $8.29
c. $7.71
d. $7.43

Answer 1

11: D