Assume that the following data relative to Gaga Company for 2019 is available: Net Income Common shares issued and outstanding Tax rate 8% Cumulative Convertible, $100 par value Preferred Shares Convertible into 200,000 common shares 12% Convertible Bonds ($100 bond each convertible into 15 common shares) Call Options Exercisable at the option price of $25 per share. Average market price in 2019, $30 Warrants Exercisable at option price of $32/ share Average market price in 2019, $30 Instructions (a) Calculate the basic earnings per share for 2019. (Round to two decimal places) (b) Calculate the diluted earnings per share for 2019. (Round to two decimal places) $2,400,000 2,000,000 27% $1,000,000 $95,000 60,000 shares 22,000 shares

Assume that the following data relative to Gaga Company for 2019 is available: Net Income Common shares issued and outstanding Tax rate 8% Cumulative Convertible, $100 par value Preferred Shares Convertible into 200,000 common shares 12% Convertible Bonds ($100 bond each convertible into 15 common shares) Call Options Exercisable at the option price of $25 per share. Average market price in 2019, $30 Warrants Exercisable at option price of $32/ share Average market price in 2019, $30 Instructions (a) Calculate the basic earnings per share for 2019. (Round to two decimal places) (b) Calculate the diluted earnings per share for 2019. (Round to two decimal places) $2,400,000 2,000,000 27% $1,000,000 $95,000 60,000 shares 22,000 shares

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

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 25E

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Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.
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