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Calculation Amount Amount Punch Manufacturing Income from Operation $ 125,000.00 Short Retail Stores Net income $53,400.00 $ 12,000.00 $ 65,400.00 Assumed conversion of bonds Earning available Short Share outstanding 20,000.00 Assume conversion of bonds 8,000.00 Assume conversion of preferred shares 14,000.00 Divide by total shares 42,000.00 |Compute EPS for Short Multiply by shares held by Punch Contribution to Punch Earnings $ 1.56 22,000*80% 17600 $ 27,405.71 $ 152,405.71 Total earning of Punch Manufacturing Less-preferred dividend (22,000.00) $ 130,405.71 Earnings to Punch Common Shareholders Divide by Punch Shares outstanding 15,000.00 $ Diluted EPS 8.69 Punch Manufacturing Corporation Short Retail Stores Assets $ 51,000 102,000 260,000 100,000 490,000 (235,000) 124,000 $ 892,000 $ 31,000 82,000 130,000 70,000 350,000 (130,000) Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Short Retail Stores Total Assets $ 533,000 Liabilities and Equity Accounts Payable Bonds Payable Preferred Stock ($10 par value) Common Stock: $ 52,000 280,000 200,000 $ 88,000 200,000 90,000 $10 par value $5 par value Retained Earnings 150,000 210,000 $ 892,000 100,000 55,000 $ 533,000 Total Liabilities and Equity

Calculation Amount Amount Punch Manufacturing Income from Operation $ 125,000.00 Short Retail Stores Net income $53,400.00 $ 12,000.00 $ 65,400.00 Assumed conversion of bonds Earning available Short Share outstanding 20,000.00 Assume conversion of bonds 8,000.00 Assume conversion of preferred shares 14,000.00 Divide by total shares 42,000.00 |Compute EPS for Short Multiply by shares held by Punch Contribution to Punch Earnings $ 1.56 22,000*80% 17600 $ 27,405.71 $ 152,405.71 Total earning of Punch Manufacturing Less-preferred dividend (22,000.00) $ 130,405.71 Earnings to Punch Common Shareholders Divide by Punch Shares outstanding 15,000.00 $ Diluted EPS 8.69 Punch Manufacturing Corporation Short Retail Stores Assets $ 51,000 102,000 260,000 100,000 490,000 (235,000) 124,000 $ 892,000 $ 31,000 82,000 130,000 70,000 350,000 (130,000) Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Short Retail Stores Total Assets $ 533,000 Liabilities and Equity Accounts Payable Bonds Payable Preferred Stock ($10 par value) Common Stock: $ 52,000 280,000 200,000 $ 88,000 200,000 90,000 $10 par value $5 par value Retained Earnings 150,000 210,000 $ 892,000 100,000 55,000 $ 533,000 Total Liabilities and Equity

College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter20: Corporations: Organization And Capital Stock
Section: Chapter Questions
Problem 7SPB: STATED VALUE, COMMON AND PREFERRED STOCK, AND NONCASH ASSETS Dans Hobby Stores had the following...
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Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies’ balance sheets as of December 31, 20X4, were as follows:

Short Retail’s 8 percent preferred stock is convertible into 14,000 shares of common stock, and its 10 percent bonds are convertible into 8,000 shares of common stock. Short reported net income of $53,400 for 20X4 and paid dividends of $31,000.
 
Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reported after-tax income, excluding investment income from Short, of $125,000 in 20X4 and paid dividends of $68,000. The companies file separate tax returns and are subject to a 40 percent income tax.
 
Required:
Compute basic and diluted EPS for the consolidated entity. (Round your intermediate calculations and final answers to two decimal places.)

*Basic EPS was calculated at $9.33, which is correct. I am having difficulty calculating Diluted EPS.

Calculation Amount Amount Punch Manufacturing Income from Operation $ 125,000.00 Short Retail Stores Net income $53,400.00 $ 12,000.00 $ 65,400.00 Assumed conversion of bonds Earning available Short Share outstanding 20,000.00 Assume conversion of bonds 8,000.00 Assume conversion of preferred shares 14,000.00 Divide by total shares 42,000.00 |Compute EPS for Short Multiply by shares held by Punch Contribution to Punch Earnings $ 1.56 22,000*80% 17600 $ 27,405.71 $ 152,405.71 Total earning of Punch Manufacturing Less-preferred dividend (22,000.00) $ 130,405.71 Earnings to Punch Common Shareholders Divide by Punch Shares outstanding 15,000.00 $ Diluted EPS 8.69
Transcribed Image Text:Calculation Amount Amount Punch Manufacturing Income from Operation $ 125,000.00 Short Retail Stores Net income $53,400.00 $ 12,000.00 $ 65,400.00 Assumed conversion of bonds Earning available Short Share outstanding 20,000.00 Assume conversion of bonds 8,000.00 Assume conversion of preferred shares 14,000.00 Divide by total shares 42,000.00 |Compute EPS for Short Multiply by shares held by Punch Contribution to Punch Earnings $ 1.56 22,000*80% 17600 $ 27,405.71 $ 152,405.71 Total earning of Punch Manufacturing Less-preferred dividend (22,000.00) $ 130,405.71 Earnings to Punch Common Shareholders Divide by Punch Shares outstanding 15,000.00 $ Diluted EPS 8.69
Punch Manufacturing Corporation Short Retail Stores Assets $ 51,000 102,000 260,000 100,000 490,000 (235,000) 124,000 $ 892,000 $ 31,000 82,000 130,000 70,000 350,000 (130,000) Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Short Retail Stores Total Assets $ 533,000 Liabilities and Equity Accounts Payable Bonds Payable Preferred Stock ($10 par value) Common Stock: $ 52,000 280,000 200,000 $ 88,000 200,000 90,000 $10 par value $5 par value Retained Earnings 150,000 210,000 $ 892,000 100,000 55,000 $ 533,000 Total Liabilities and Equity
Transcribed Image Text:Punch Manufacturing Corporation Short Retail Stores Assets $ 51,000 102,000 260,000 100,000 490,000 (235,000) 124,000 $ 892,000 $ 31,000 82,000 130,000 70,000 350,000 (130,000) Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Short Retail Stores Total Assets $ 533,000 Liabilities and Equity Accounts Payable Bonds Payable Preferred Stock ($10 par value) Common Stock: $ 52,000 280,000 200,000 $ 88,000 200,000 90,000 $10 par value $5 par value Retained Earnings 150,000 210,000 $ 892,000 100,000 55,000 $ 533,000 Total Liabilities and Equity
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