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ACC - Module 7 Problem Solution Assignment - Karen Company

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Question;Module7 Problem Solution Assignment:Problem1KarenCompanyhad105,000sharesofcommonstockoutstandingonJanuary1,2011.OnAugust30,2011,Karensold50,000sharesofcommonstockforcash.Karenalsohad11,000sharesofconvertiblepreferredstockoutstandingthroughout2011.Thepreferredstockis$105par,5%,andisconvertibleinto4sharesofcommonforeachshareofpreferred.Karenalsohad400,8%,convertiblebondsoutstandingthroughout2011.Each$1,000bondisconvertibleinto35sharesofcommonstock.Thebondssoldoriginallyatpar.Reportednetincomefor2011was$350,000witha35%taxrate.Theregularcommonandpreferreddividendswerepaidin2011.Requirements:1Computebasicanddilutedearningspersharefor20112Whatismeantbydilutionofearningspershare?3Whatistheifconvertedmethod?

 

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