Question

During all of the year just ended, Littlefield, Inc., had outstanding 100,000 shares of common stock and 5,000 shares of noncumulative, $7 preferred stock. Each share of the latter is convertible into three shares of common. For the year, Littlefield had $230,000 income from continuing operations and a $575,000 loss on discontinued operations; no dividends were paid or declared. Littlefield should report diluted earnings (loss) per share (DEPS) for income from continuing operations and for net income (loss), respectively, of:

Answer 1

Answer:

The diluted earnings per share for income from continuing operations is $1.92 and for net income is -$2.875.

Explanation:

Net income = $230,000 - $575,000

                   = -$345,000 (loss)

total outstanding shares = 100,000 + 5,000 + 15000

                                         = 120,000

diluted earnings (loss) per share for net income (loss)

= -$345,000/120,000

                                                                                = -$2.875  

diluted earnings (loss) per share for income from countinuing operations = $230,000/120,000

                  = $1.92

Therefore, the diluted earnings per share for income from continuing operations is $1.92 and for net income is -$2.875.