On January 2,2014,CBA issued at par $10,000 of 8 percent bonds convertible into 2,000 of CBA's common shares.No bonds were converted during 2014.Throughout 2014,CBA had 2,000 common shares outstanding.CBA's net income after tax was $1,000.CBA's income tax rate is 50 percent.No potentially dilutive securities other than the convertible bonds were outstanding during 2014.CBA's basic EPS and diluted EPS for 2014 would be:

Question

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Basic EPS is calculated as net income divided by the number of common shares outstanding. Diluted EPS considers the effect of convertible securities. The interest on the bonds (after tax) is added back to net income for diluted EPS, and the additional shares from conversion are included in the share count.

On January 2,2014,CBA Issued at Par $10,000 of 8 Percent