Chapter 18

As convertible preferred stock has a ratio of 2.00, which is lower than the EPS from step 1 ($8), include convertible preferred stock in diluted EPS calculation. Diluted EPS after convertible preferred stock is considered as =($40,000 + 0 + $2,000)/(4,000+ 1,000 + 1,000), or $7. Step 3. ................
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