Subject: acounting The following transactions have also occurred at Blossom.Options were granted on July 1, 2024, to purchase 220,000 shares at $14 per share. Although no options were exercisedduring fiscal year 2025, the average price per common share during fiscal year 2025 was $20 per share.1.2.3.4.5.6.Each bond was issued at face value. The 8% 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 2024.The preferred stock was issued in 2024.There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2025.The 1,020,000 shares of common stock were outstanding for the entire 2025 fiscal year.Net income for fiscal year 2025 was $1,490,000, and the average income tax rate is 20%.For the fiscal year ended June 30, 2025, calculate the following for Blossom Pharmaceutical Industries. (Round answers to 2 decimalplaces, e.g. 2.45.)a. Basic earnings per share.Basic earnings per share $b. Diluted earnings per share.Diluted earnings per share.146117 Amy Dyken, controller at Blossom Pharmaceutical Industries, a public company, is currently preparing the calculation for basic anddiluted earnings per share and the related disclosure for Blossom's financial statements. Below is selected financial information for thefiscal year ended June 30, 2025.Long-term debtNotes payable, 11%8% convertible bonds payable11% bonds payableTotal long-term debtBlossom Pharmaceutical IndustriesSelected Balance Sheet InformationJune 30, 2025Shareholders' equityPreferred stock, 6% cumulative, $50 par value, 98,000 shares authorized, 24,500 shares issued and outstandingCommon stock, $1 par, 10,200,000 shares authorized, 1,020,000 shares issued and outstandingAdditional paid-in capitalRetained earningsTotal shareholders' equity$980,0005,030,0006,100,000$12,110,000$1,225,000.1,020,0003,940,0006,120,000$12,305,000

The term "earnings per share" (EPS) refers to the net earnings of a business divided by the total…

Answered: The following transactions have also…

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 28E

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On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of 2019, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of 80,000 and were issued in 2016 at par. Each 1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2019, the company earned net income of 79,200 and was subject to an income tax rate of 30%. Required: Compute the 2019 diluted earnings per share.
Percy Company has 15,000 shares of common stock outstanding during all of 2019. It also has 2 convertible securities outstanding at the end of 2019. These are: 1. Convertible preferred stock: 1,000 shares of 9%, 100 par, preferred stock were issued in 2015 for 140 per share. Each share of preferred stock is convertible into 3.5 shares of common stock. The current dividends have been paid. To date, no preferred stock has been converted. 2. Convertible bonds: Bonds with a face value of 100,000 and an interest rate of 10% were issued at par on July 1, 2019. Each 1,000 bond is convertible into 35 shares of common stock. To date, no bonds have been converted. Percy earned net income of 54,000 during 2019. Its income tax rate is 30%. Required: Compute the 2019 diluted earnings per share. What earnings per share amount(s) would Percy report on its 2019 income statement?
Winona Company began 2019 with 10,000 shares of 10 par common stock and 2,000 shares of 9.4%, 100 par, convertible preferred stock outstanding. On April 2 and June 1, respectively, the company issued 2,000 and 6,000 additional shares of common stock. On November 16, Winona declared a 2-for-1 stock split. The preferred stock was issued in 2018. Each share of preferred stock is currently convertible into 4 shares of common stock. To date, no preferred stock has been converted. Current dividends have been paid on both preferred and common stock. Net income after taxes for 2019 totaled 109,800. The company is subject to a 30% income tax rate. The common stock sold at an average market price of 24 per share during 2019. Required: 1. Prepare supporting calculations for Winona and compute its: a. basic earnings per share b. diluted earnings per share 2. Show how Winona would report the earnings per share on its 2019 income statement. Include an accompanying note to the financial statements. 3. Next Level Assume Winona uses IFRS. Discuss what Winona would do differently for computing earnings per share, and then repeat Requirement 1 under IFRS.
Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?
Stockholders' Equity Terminology A list of terms and a list of definitions or examples are presented below. Make a list of the numbers 1 through 12 and match the letter of the most directly related definition or example with each number Definitions and Examples Capitalizes retained earnings. Shares issued minus treasury shares. Emerson Electric will pay a dividend to all persons holding shares of its common stock on December 15, 2019, even if they just bought the shares and sell them a few days later. The accumulated earnings over the entire life of the corporation that have not been paid out in dividends. Common Stock account balance divided by the number of shares issued. The state of Louisiana set an upper limit of 1,000,000 on the number of shares that Gumps Catch Inc. can issue. Shares that never earn dividends. Any changes to stockholders equity from transactions with no owners. A right to purchase stock at a specified future time and specified price. j. A stock issue that requires no journal entry. k. Shares that may earn guaranteed dividends. 1. On October 15, 2019, General Electric announced its intention to pay a dividend on common stock.
Waseca Company had 5 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 of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.
During 2020, Empresas ABC issued 4,000 preferred shares with a par value of $ 10 to $ 11 each. Each preferred share can be exchanged at the option of the holder (investor) for three common shares of ABC with a par value of $ 1. In August 2021, all preferred shares were exchanged. At that time the market value of the common stock was $ 5 per share. What amount must ABC credit to the Capital account contributed in excess of the value for common shares? a. $32,000 b. $48,000 c. 0 d. $44,000
On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Flounder Corp. issued $12,400,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $13,392,000. The present value of the bond payments at the time of issuance was $10,540,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.(a) Prepare the…
Arco, Inc. issued $300,000 of 4%, 10-year convertible bonds at par on July 1, 2022. Each bond has a par value of $1000. The bonds include the option for bondholders to convert each bond into 50 $1 par value shares of common stock beginning two years after the date of issue. The market price of the stock at the time of issue is $25 per share and the beneficial conversion option is valued at $75,000. On July 2, 2024, when the market price of the stock is $35 and the balance in the Discount account is $66,000, all of the bondholders convert the bonds. What is the proper entry to record the conversion of the bonds? Group of answer choices Date Account Debit Credit July 2, 2024 Bonds Payable 300,000 Discount on Bonds Payable 75,000 Common Stock, $1 par, 15,000 shares 300,000 Add. Paid-in Capital—Bene. Conv. Option 75,000 Date Account Debit Credit July 2, 2024 Bonds Payable 300,000 Add. Paid-in Capital—Bene. Conv. Option 75,000 Discount…
On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Ivanhoe Corp. issued $11,200,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $12,096,000. The present value of the bond payments at the time of issuance was $9,520,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.(a) Prepare the entry…
On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Nash Corp. issued $10,300,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation’s common stock. The debentures were issued for $11,124,000. The present value of the bond payments at the time of issuance was $8,755,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation’s $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation’s $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.(a) Prepare the entry to…

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