Amy Dyken, controller at Novak Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Novak’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.Novak Pharmaceutical IndustriesSelected Balance Sheet InformationJune 30, 2020Long-term debt Notes payable, 10% $980,000 7% convertible bonds payable 5,060,000 10% bonds payable 5,910,000 Total long-term debt $11,950,000 Shareholders’ equity Preferred stock, 6% cumulative, $50 par value, 90,000 shares authorized, 22,500 shares issued and outstanding $1,125,000 Common stock, $1 par, 10,100,000 shares authorized, 1,010,000 shares issued and outstanding 1,010,000 Additional paid-in capital 4,060,000 Retained earnings 6,120,000 Total shareholders’ equity $12,315,000The following transactions have also occurred at Novak.1. Options were granted on July 1, 2019, to purchase 220,000 shares at $15 per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20 per share.2. Each bond was issued at face value. The 7% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019.3. The preferred stock was issued in 2019.4. There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020.5. The 1,010,000 shares of common stock were outstanding for the entire 2020 fiscal year.6. Net income for fiscal year 2020 was $1,480,000, and the average income tax rate is 20%.For the fiscal year ended June 30, 2020, calculate the following for Novak Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.)(a) Basic earnings per share.Basic earnings per share $ (b) Diluted earnings per share.Diluted earnings per share $

(a.) Preferred dividend = $1,125,000 * 6% = $67,500 Basic earnings per share = (Net income -…

Answered: For the fiscal year ended June 30,…

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

See similar textbooks

Related questions

Question

Amy Dyken, controller at Novak Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Novak’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.

Novak Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020
Long-term debt
Notes payable, 10%		$980,000
7% convertible bonds payable		5,060,000
10% bonds payable		5,910,000
Total long-term debt		$11,950,000

Shareholders’ equity
Preferred stock, 6% cumulative, $50 par value, 90,000 shares authorized, 22,500 shares issued and outstanding		$1,125,000
Common stock, $1 par, 10,100,000 shares authorized, 1,010,000 shares issued and outstanding		1,010,000
Additional paid-in capital		4,060,000
Retained earnings		6,120,000
Total shareholders’ equity		$12,315,000

The following transactions have also occurred at Novak.

1.		Options were granted on July 1, 2019, to purchase 220,000 shares at $15 per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20 per share.
2.		Each bond was issued at face value. The 7% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019.
3.		The preferred stock was issued in 2019.
4.		There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020.
5.		The 1,010,000 shares of common stock were outstanding for the entire 2020 fiscal year.
6.		Net income for fiscal year 2020 was $1,480,000, and the average income tax rate is 20%.

For the fiscal year ended June 30, 2020, calculate the following for Novak Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.)

(a) Basic earnings per share.

Basic earnings per share

(b) Diluted earnings per share.

Diluted earnings per share

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

For the fiscal year ended June 30, 2020, calculate the following for Novak Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.) (a) Basic earnings per share. Basic earnings per share $ (b) Diluted earnings per share. Diluted earnings per share $