Information concerning the capital structure of Shepherd Corporation follows December 31, 2020...
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Accounting
Information concerning the capital structure of Shepherd Corporation follows
December 31,
2020 2019
Common shares outstanding 100,000 shares 100,000 shares
Convertible preferred shares outstanding 10,000 shares 10,000 shares
9% convertible bonds $ 2,000,000 $ 2,000,000
During 2020, Shepherd paid dividends of $ 1.00 per common share and $ 2.50 per preferred share. The preferred shares are non-cumulative, and convertible into 20,000 common shares. The 9% convertible bonds are convertible into 50,000 common shares. Net income for calendar 2020 was $ 500,000. Assume the income tax rate is 30%. Basic earnings per share for 2020 is
| a. | $ 4.75. | |
| b. | $ 5.00. | |
| c. | $ 3.33. | |
| d. | $ 3.65. |
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