In-class exercise 19-3 Diluted EPS In order to calculate EPS for the current year, Ajax Corporation has collected the following information about its common stock: Outstanding shares - beginning of the year (January 1) Additional shares issued on April 1 15% stock dividend declared and distributed on July 1 Shares reacquired on October 1 Net income for the year Dividends declared and paid for noncumulative, nonconvertible preferred stock 1,000,000 200,000 100,000 $3,000,000 $200,000 a) Calculate Ajax's basic EPS. b) Ajax's capital structure includes convertible bonds with a face value of $4,000,000 (issued at par) that pay 5% annual interest. These bonds are convertible into 500,000 common shares. Ajax's effective tax rate is 20%. Ajax has determined that the convertible bonds are dilutive. Calculate Ajax's diluted EPS.

In-class exercise 19-3 Diluted EPS In order to calculate EPS for the current year, Ajax Corporation has collected the following information about its common stock: Outstanding shares - beginning of the year (January 1) Additional shares issued on April 1 15% stock dividend declared and distributed on July 1 Shares reacquired on October 1 Net income for the year Dividends declared and paid for noncumulative, nonconvertible preferred stock 1,000,000 200,000 100,000 $3,000,000 $200,000 a) Calculate Ajax's basic EPS. b) Ajax's capital structure includes convertible bonds with a face value of $4,000,000 (issued at par) that pay 5% annual interest. These bonds are convertible into 500,000 common shares. Ajax's effective tax rate is 20%. Ajax has determined that the convertible bonds are dilutive. Calculate Ajax's diluted EPS.

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 16E: Contributed Capital Adams Companys records provide the following information on December 31, 2019:...

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Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.
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