Robertson Company had 40,000 shares of common stock outstanding during 2014 and compensatory share options to purchase 5,000 shares of common stock at $10 a share plus a $3 a share unrecognized compensation cost (net of tax). The average market price is $20 a share. The company also had 7% convertible preferred stock on which dividends of $9,000 were declared. Each preferred share is convertible into 6,000 common shares. Robertson's after-tax net income was $88,000, and the tax rate was 40%.
Required:
Compute 2014 diluted earnings per share for Robertson Company.

Question

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The Answer of Robertson Company had 40,000 shares of common stock outstanding during 2014 and compensatory share options to purchase 5,000 shares of common stock at $10 a share plus a $3 a share unrecognized compensation cost (net of tax). The average market price is $20 a share. The company also had 7% convertible preferred stock on which dividends of $9,000 were declared. Each preferred share is convertible into 6,000 common shares. Robertson's after-tax net income was $88,000, and the tax rate was 40%.
Required:
Compute 2014 diluted earnings per share for Robertson Company.

Robertson Company Had 40,000 Shares of Common Stock Outstanding During