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Isabelle Leclerc is the controller at Camden Pharmaceutical Industries a public company. She is currently preparing the calculation for basic and diluted earnings per share and the related disclosure

Isabelle Leclerc is the controller at Camden Pharmaceutical Industries, a public company. She is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Camden s external financial statements. The following is selected financial information for the fiscal year ended June 30, 2014: The following transactions have also occurred at Camden: 1. Options were granted by the company in 2012 to purchase 100,000 shares at $15 per share. Although no options were exercised during 2014, the average price per common share during fiscal year 2014 was $20. 2. Each bond was issued at face value. The 7% convertible debenture will convert into common shares at 50 shares per $1,000 bond. It is exercisable after five years and was issued in 2013. Ignore any requirement to record the bonds debt and equity components separately. 3. The $4.25 preferred shares were issued in 2012. 4. There are no preferred dividends in arrears, and preferred dividends were not declared in fiscal year 2014. 5. The 1 million common shares were outstanding for the entire 2014 fiscal year. 6. Net income for fiscal year 2014 was $1.5 million, and the average income tax rate was 30%. Instructions (a) For the fiscal year ended June 30, 2014, calculate the following for Camden Pharmaceutical Industries: 1. Basic earnings per share 2. Diluted earnings per share (b) Explain how premiums and discounts on outstanding convertible bonds affect the calcula

Apr 05 2020 View more View Less

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