1 On January 1st 2015, The Bond James Bond (BJB) Company purhcased all of the voting stock of the Spectre Company at book value2 At the beginning of 2022, Spectre Company issued 500 shares of 6% cumulative preferred stock3 On December 31st 2022 BJB and Spectre had the following (note: there were no transactions between Spectre and BJB in 2022)456789101112131415161718192021222324252627282930Commonstock $1 paradditional pic commonpreferred stock $100 parretained earningsSalesexpensesnet incomeBJB50000100000Part 1: In 2022 (no transactions between the 2 companies)BJB0salesexpensesnet income8000001000004000060000Required: Calculate BJB's earnings per share (EPS) for 2022Part 2: In 2022 (no transactions between the 2 companies)BJB1000004000060000Spectre5000500050,00020000Spectre300001200018000Spectre300001200018000Required: the preferred stock is convertible where each share of preferred stock can be converted into2 shares of Spectre Common stock. Calculate BJB's earning per share (EPS) for 2022

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1 On January 1st 2015, The Bond James Bond (BJB) Company purhcased all of the voting stock of the Spectre Company at book value 2 At the beginning of 2022, Spectre Company issued 500 shares of 6% cumulative preferred stock 3 On December 31st 2022 BJB and Spectre had the following (note: there were no transactions between Spectre and BJB in 2022) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Commonstock $1 par additional pic common preferred stock $100 par retained earnings Sales expenses net income BJB 50000 100000 0 Part 1: In 2022 (no transactions between the 2 companies) BJB sales expenses net income 800000 100000 40000 60000 Required: Calculate BJB's earnings per share (EPS) for 2022 Part 2: In 2022 (no transactions between the 2 companies) BJB 100000 40000 60000 Spectre 5000 5000 50,000 20000 Spectre 30000 12000 18000 Spectre 30000 12000 18000 Required: the preferred stock is convertible where each share of preferred stock can be converted into 2 shares of Spectre Common stock. Calculate BJB's earning per share (EPS) for 2022

1 On January 1st 2015, The Bond James Bond (BJB) Company purhcased all of the voting stock of the Spectre Company at book value 2 At the beginning of 2022, Spectre Company issued 500 shares of 6% cumulative preferred stock 3 On December 31st 2022 BJB and Spectre had the following (note: there were no transactions between Spectre and BJB in 2022) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Commonstock $1 par additional pic common preferred stock $100 par retained earnings Sales expenses net income BJB 50000 100000 0 Part 1: In 2022 (no transactions between the 2 companies) BJB sales expenses net income 800000 100000 40000 60000 Required: Calculate BJB's earnings per share (EPS) for 2022 Part 2: In 2022 (no transactions between the 2 companies) BJB 100000 40000 60000 Spectre 5000 5000 50,000 20000 Spectre 30000 12000 18000 Spectre 30000 12000 18000 Required: the preferred stock is convertible where each share of preferred stock can be converted into 2 shares of Spectre Common stock. Calculate BJB's earning per share (EPS) for 2022

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 5MC

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Percy Company has 15,000 shares of common stock outstanding during all of 2019. It also has 2 convertible securities outstanding at the end of 2019. These are: 1. Convertible preferred stock: 1,000 shares of 9%, 100 par, preferred stock were issued in 2015 for 140 per share. Each share of preferred stock is convertible into 3.5 shares of common stock. The current dividends have been paid. To date, no preferred stock has been converted. 2. Convertible bonds: Bonds with a face value of 100,000 and an interest rate of 10% were issued at par on July 1, 2019. Each 1,000 bond is convertible into 35 shares of common stock. To date, no bonds have been converted. Percy earned net income of 54,000 during 2019. Its income tax rate is 30%. Required: Compute the 2019 diluted earnings per share. What earnings per share amount(s) would Percy report on its 2019 income statement?
Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.
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