Mills Company had five 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 convertible security is described in the following table. The corporate income tax rate is 30%. Security Description 9.5% preferred stock $200,000 par value. Issued at 112. Each $100 par preferred stock is convertible into 4.2 shares of common stock. 11.0% bonds $220,000 face value. Issued at par. Each $1,000 bond is convertible into 44 shares of common stock. 8.0% preferred stock $150,000 par value. Issued at par. Each $100 par preferred stock is convertible into 3.8 shares of common stock. 10.0% bonds $100,000 face value. Issued at 94. Discount being amortized over 20-year life. Each $1,000 bond is convertible into 55 shares of common stock. 9.0% bonds $200,000 face value. Issued at 108. Premium being amortized over 25-year life. Each $1,000 bond is convertible into 48 shares of common stock. Required: Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share and, also prepare a ranking (from 1 to 5) of the order in which the securities would be included in the diluted earnings per share computations. Note: The convertible security having the most dilutive impact on diluted earnings per share is listed at the top of the ranking or "1". If required, round your "Impact" answers to two decimal places. Mills Company Schedule of Impact on EPS and Rankings Impact Ranking 9.5% preferred $fill in the blank 1 fill in the blank 2 11.0% bonds $fill in the blank 3 fill in the blank 4 8.0% preferred $fill in the blank 5 fill in the blank 6 10.0% bonds $fill in the blank 7 fill in the blank 8 9.0% bonds $fill in the blank 9 fill in the blank 10

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 21E: Mills Company had five convertible securities outstanding during all of 2019. It paid the...

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Impact on EPS and Rankings

Mills Company had five 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 convertible security is described in the following table. The corporate income tax rate is 30%.

Security	Description
9.5% preferred stock	$200,000 par value. Issued at 112. Each $100 par preferred stock is convertible into 4.2 shares of common stock.
11.0% bonds	$220,000 face value. Issued at par. Each $1,000 bond is convertible into 44 shares of common stock.
8.0% preferred stock	$150,000 par value. Issued at par. Each $100 par preferred stock is convertible into 3.8 shares of common stock.
10.0% bonds	$100,000 face value. Issued at 94. Discount being amortized over 20-year life. Each $1,000 bond is convertible into 55 shares of common stock.
9.0% bonds	$200,000 face value. Issued at 108. Premium being amortized over 25-year life. Each $1,000 bond is convertible into 48 shares of common stock.

Required:

Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share and, also prepare a ranking (from 1 to 5) of the order in which the securities would be included in the diluted earnings per share computations.

Note: The convertible security having the most dilutive impact on diluted earnings per share is listed at the top of the ranking or "1". If required, round your "Impact" answers to two decimal places.

Mills Company
Schedule of Impact on EPS and Rankings

	Impact	Ranking
9.5% preferred	$fill in the blank 1	fill in the blank 2
11.0% bonds	$fill in the blank 3	fill in the blank 4
8.0% preferred	$fill in the blank 5	fill in the blank 6
10.0% bonds	$fill in the blank 7	fill in the blank 8
9.0% bonds	$fill in the blank 9	fill in the blank 10

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