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  3. petty co. owned 70% of the common stock of sunny c

Petty Co. owned 70% of the common stock of Sunny Co. Petty had 120,000 shares...

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Accounting

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Petty Co. owned 70% of the common stock of Sunny Co. Petty had 120,000 shares of common stock outstanding and Sunny had 80,000 shares of common stock outstanding in current year. Sunny had 7,000 units of convertible bonds outstanding. each of which is convertible into four shares of common stock. The annual interest expense for the bonds was $56,000. Petty did not own any of Sunny's bonds. In current year, Petty reported income of $580,000 (exclusive of any investment income) and Sunny reported income of $340,000. The tax rate is 30%. Calculate the consolidate diluted earnings per share by completing the following two questions. 1. What is Petty's ownership interest in Sunny (in percentage) after considering the dilutive securities that Sunny issued? Round your answer to four decimal places (e.g. 0.234560.2346 or 23.46%) ( 2.5 points) Answer: 2. What amount of investment income from Sunny that Petty should include in calculating consolidated diluted earnings per share? ( 2.5 points; round your answer to the nearest inllarl Answer: A

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