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The following information is available for a company for the year 2021. Net income $390,000...

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Accounting

The following information is available for a company for the year 2021.

Net income $390,000

Interest expense $100,000

Income tax rate 22%

The $100,000 interest expense relates to convertible bonds. For Basic EPS purposes, the weighted average number of common shares outstanding was 136,000.

The company had 1,000 convertible bonds. Each bond is convertible into 25 common shares. The bonds were issued in 2017. Bondholders have the option to convert the bonds starting in 2022.

a. Compute Basic and Diluted EPS for 2021.

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