Reading 32: Understanding the Income Statement - LOS h, (Pa net, reported, common, income, style

mayanfang1

Q1. During 2004, Covax Corp. reported net income of $2.4 million and 2 million shares of common stock. Covax paid cash dividends

of $14,000 to its preferred shareholders and $30,000 to its common shareholders. In 2004, Covax issued 900, $1,000 par, 5.5

percent bonds for $900,000. Each bond is convertible to 50 shares of common stock. Assume the tax rate is 40%. Compute

Covax’s basic and diluted EPS.

       Basic EPS             Diluted EPS

A)       $1.19            $1.22

B)      $1.22            $1.22

C)      $1.19            $1.18

清川Roger

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