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SLL, Inc., a Delaware corporation, sells customized backpacks in a small shop in Pikesville, MD.

The corporation has issued 714,000 shares of $5 par common stock.

The following table summarizes the contributed capital portion of the company's Balance Sheet.

Common stock, authorized	1,000,000	shares
Par value	$5	per share
Common stock, Issued and Outstanding	714,000	shares

The Board of Directors of SLL, Inc. announced its strategic plan for global expansion, which included selling its customized backpacks online.

On January 1, 20X8, SLL issued 1,000 convertible bonds to generate the cash need for Website development and a larger distribution plant.

As expected, SLL, Inc. met projected sales budgets and contained costs as reported on the pro forma financial statements that were made available to prospective bond investors.

The table below summarizes the 20X8 operations.

Assume:	Dec 31, 20X8
Net Income	$373,854
Bonds issued	1,000	convertible bonds
Bond term	5	years
Bonds face value	$1,000
Bonds contract rate of interest	5%
Bond convertible into	200	shares of common stock for each $1,000 bond
# of shares issued in converted	200,000

Hint: ignore income tax effects for this problem.

Use the information above about SLL, Inc. to calculate the following:

Calculate basic EPS in 20X8.

Hint: The answer is in dollars. To enter cents, use decimals. For example, 12 cents would be 0.12.

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Use the information above about SLL, Inc. to calculate the following:

Calculate diluted EPS in 20X8.

Hint 1: The answer is in dollars. To enter cents, use decimals. For example, 12 cents would be 0.12.

HINT 2: Diluted EPS calculations have a higher net income because it is adjusted for the lack of bond interest expense and a higher number of shares outstanding.

$	unanswered

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