During 2018, angel corporation had 900,000 shares of common stock and 50,000 shares of 6% preferred stock outstanding. the preferred stock does not have cumulative or convertible features. angel declared and paid cash dividends of $300,000 and $150,000 to common and preferred shareholders, respectively, during 2018. on january 1, 2017, angel issued $2,000,000 of convertible 5% bonds at face value. each $1,000 bond is convertible into five common shares. angel's net income for the year ended december 31, 2018, was $6 million. the income tax rate is 20%. what will angel report as diluted earnings per share for 2018, rounded to the nearest cent?

$6.52 per share

Explanation:

Basic earning per share:

= Earning available to equity shareholders ÷ Total no. of equity shares

= (Net income - Dividend paid to preferred shareholders) ÷ 900,000

=  ($6,000,000 - $150,000) ÷ 900,000

= $5,850,000 ÷ 900,000

= $6.5

Number of converted bonds in to shares :

= 2,000,000 × (5 ÷ 1000)

= 10,000 shares

Interest on debt:

= $2,000,000 × 0.05

= $100,000

After tax interest :

= $100,000(1 - 0.20)

= $80,000

Diluted earning per share:

= [net income + increase in interest (after tax)-preferred dividend] ÷ [weighted average common shares + converted shares]

= [6,000,000 + 80,000 - 150,000] ÷ [900,000+10,000]

= 5,930,000 ÷ 910,000

= $6.52 per share

answer; /// i do believe that the correct answer is ; ///claude garamond;

someone i feel is a leader in my life id have to say would be my mother because she has give me great advice in life and got me out of tough situations. some characteristics she has are creativity, honesty, commitment, respect for others, and communication. one example of a situation when she demonstrated leadership was when i was working late on homework and i started to get stressed and got upset, she asked me if i needed some , and she me with my work. she demonstrated communication and commitment.

i don't know if this is exactly what your looking for but i hope this !