Below we present Gamba Incorporated s current year

partial income statement Gamba #3304

Below we present Gamba Incorporated’s current-year partial income statement. Gamba is
subject to a 35% income tax rate.Partial Income Statement Current YearIncome from continuing
operations………………………. $ 1,250,990Discontinued operations-income, net of tax………………
533,060Net income………………………………………………... $ 1,784,050 A partial balance sheet for th
year follows. Liabilities: 5% Convertible Debt – issued at $ 1,000 par(1)…………... $ 8,113,000
Stockholders’ Equity: Common Stock, no par(1,032,000 shares issued and
outstanding)(2)…………………………………. $ 5,160,000 $ 3 Convertible Preferred Stock, $ 100 par val
(42,500 shares issued and outstanding)(3) ………………… 4,250,000 Deferred compensation
(employee options toacquire 167,500 shares)(4)………………………………….. (1,842,500)Footnotes to
Balance Sheet:(1) Each bond is convertible into 80 shares of common stock. The bonds are
outstanding all year.(2) The number of shares issued and outstanding did not change
throughout the year.(3) Each preferred share is convertible into 8 shares of common stock. The
firm declared preferred dividends. The preferred stock was outstanding all year.(4) The options
are exercisable at $ 21 per share and the average market price of the company’s stock for the
year is $ 35. The options were outstanding all year.Requireda. Based on the information
provided, compute basic and diluted earnings per share for the current year. Include all
computations related to the application of antidilution sequencing, if needed.b. Prepare the
income statement disclosures required beginning with income from continuing operations.View
Solution:
Below we present Gamba Incorporated s current year partial income statement Gamba

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