22: Suggested Problems 1. Stangeland Conpany reported the following book values for items related to their capital structure on 12/31/1997 : 121 Bonds payable," convertible into common stock at the rate of 25 shares for each 51,000 maturity, issued at par; value of bonds...................................\$270,000 Preferred stock, 5\%, par $100, noncunulative, value.... 300,000 Preferred Shares outstanding on January 1: 1,000 Additional shares issued for eash on Oetober 1: 500 Common stock, nopar, 266,000 shares, value...........7.75,000 Shares outstanding on January 1:200,000 Shares issued for cash, Apri1 1: 20,000 Stock dividend, May 19: 40 Shares repurchased, July 1: 42,000 Common stock warrants outstanding for 60,000 shares of conmon stock, one warrant per share, option striking price: $6 per share, value.................................... 30,000 Stangeland reported the following information regarding the results of operations for the fiscal year ended 12/31/1997: Income before extraordinary items ....................607,625 Extraordinary loss................................ (5,000) " The warrants and bonds were outstanding on 1/1/1997. Additional data: 1. Income tax rate for the year, 408 . 2. Average price of common stock for the year: $6.40. 3. Preferred dividends are paid at the end of each calendar quarter, on March 31, June 30, September 30, and December 31. Preferred dividends were declared and paid during 1997. In the box below, show basic and diluted earnings per share of Stangeland Company as it should appear on the income statenent for 1997. [diluted IFCO/share =2.12158