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%.
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What is Angel's basic earnings per share for 2018, rounded to the nearest cent?
A) $5.29.
B) $5.57.
C) $6.50.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

The basic EPS is $6.50.
The computation is as follows: 11ea937b_3598_10db_a419_c3801cfbbc41_TB2599_00

During 2018, Angel Corporation Had 900,000 Shares of Common Stock