ACC/423 (ACC423)INTERMEDIATE FINANCIAL ACCOUNTING IIIUniversity of Phoenix (UoP)

ACC/423 (ACC423)INTERMEDIATE FINANCIAL ACCOUNTING IIIUniversity of
Phoenix (UoP)Kieso D. E. Weygandt J. J. & Warfield T. D.
(2007).Intermediate Accounting (12th ed.) (13th
Ed.)Hoboken NJ: John Wiley & Sons.Week Two (Week 2)
Chapter 15 and Chapter 16Problem 16-7 (P16-7) (Computation of Basic and Diluted EPS) The
information below pertains to Prancer Company for 2007.Net income for the
year $12000008% convertible bonds issued at par ($1000 per bond). Each
bond is convertible into 40 shares of common stock. 20000006% convertible
cumulative preferred stock $100 par value. Each share is convertible into 3
shares of common stock. 3000000Common stock $10 par value
6000000Common stock options (granted in a prior year) to purchase 50000
shares of common stock at $20 per share 500000Tax rate for 2004
40%Average market price of common stock $25 per shareThere were no
changes during 2007 in the number of common shares preferred shares or
convertible bonds outstanding. There is no treasury
stock.Instructions(a) Compute basic earnings per share for
2007.(b) Compute diluted earnings per share for 2007.