![INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260180657/9781260180657_smallCoverImage.gif)
EPS; non convertible
• LO19–4 through LO19–8, LO19–10
(Note: This is a variation of P 19–11, modified to include stock options.)
On December 31, 2017, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018.
On February 28, 2018, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow’s net income for the year ended December 31, 2018, was $2,100,000. The income tax rate is 40%.
As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows:
Date Granted | Options Granted | Share Price |
(adjusted for the stock dividend) | ||
December 31, 2016 | 8,000 | $24 |
December 31, 2017 | 3,000 | $33 |
December 31, 2018 | 6,500 | $32 |
The market price of the common stock averaged $32 per share during 2018.
Required:
Compute Dow’s earnings per share for the year ended December 31, 2018.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 19 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
- Required information Problem 10-2A (Algo) Record equity transactions and indicate the effect on the balance sheet equation (LO10-2, 10-3, 10-4, 10-5) [The following information applies to the questions displayed below.] Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2024, 450 shares of preferred stock and 5,500 shares of common stock have been issued. The following transactions affect stockholders' equity during 2024: March 1 May 15 July 10 Issue 2,600 shares of common stock for $57 per share. Purchase 550 shares of treasury stock for $50 per share. Resell 350 shares of treasury stock purchased on May 15 for $55 per share. Issue 350 shares of preferred stock for $60 per share. Declare a cash dividend on both common and preferred stock of $2.00 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.) December 31 Pay the cash dividends declared on December 1. October…arrow_forwardProblem 19-11 (Static) EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend (LO19-4, 19-5, 19-6, 19-7] On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2021, was $2.100,000. The income tax rate is 25%. Required: Compute Dow's earnings per share for the year ended December 31, 2021. (Do not round Intermedlate calculations. Enter your answers in thousands. Round "Earnings per share" answer to 2 decimal places.) Numerator Denominator Earnings per share 2 of 3# Next > < Prev %3Darrow_forwardRequired information Problem 8-24 (Algo) Common and preferred stock-issuances and dividends LO 1, 2 [The following information applies to the questions displayed below] Permabilt Corp. was incorporated on January 1, 2019, and issued the following stock for cash: • 1100.000 shares of no-par common stock were authorized; 277,000 shares were issued on January 1, 2019, at $31 per share. . 447,000 shares of $100 par value, 10.00% cumulative, preferred stock were authorized; 126.000 shares were issued on January 1, 2019, at $125 per share. • No dividends were declared or paid during 2019 or 2020. However, on December 22, 2021, the board of directors of Permabilt Corp, declared dividends of $6,120.000, payable on February 12, 2022, to holders of record as of January 8, 2022. Problem 8-24 (Algo) Part c c. Calculate the common stock dividends per share declared during 2021. (Round your answer to 2 decimal places.) Common stock dividends per share Movt >arrow_forward
- P13.3A LO 1, 2, 3) Financial Statement The stockholders' equity accounts of Castle Corporation on January 1, 2020, were as follows Journalize and post transactions, and prepare stockholders' equity section GLS Preferred Stock (8%, $50 par, 10,000 shares authorized) Common Stock ($1 stated value, 2,000,000 shares authorized) 1,000,000 Paid-in Capital in Excess of Par-Preferred Stock Paid-in Capital in Excess of Stated Value Common Stock1,450,000 Retained Earnings Treasury Stock (10,000 common shares) $400,000 100,000 1,816,000 50,000 During 2020, the corporation had the following transactions and events pertaining to its stockholders' equity Feb.1 Issued 25,000 shares of common stock for $120,000 Apr. 14 Sold 6,000 shares of treasury stock-common for $33,000 Sept. 3 lssued 5,000 shares of common stock for a patent valued at $35,000 Nov. 10 Purchased 1,000 shares of common stock for the treasury at a cost of $6,000 Dec. 31 Determined that net income for the year was $452,000 No dividends…arrow_forwardRequired information Problem 10-2A (Algo) Record equity transactions and indicate the effect on the balance sheet equation (LO10-2, 10-3, 10-4, 10-5) [The following information applies to the questions displayed below.] Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2024, 320 shares of preferred stock and 4,200 shares of common stock have been issued. The following transactions affect stockholders' equity during 2024: March 1 May 15 July 10 Issue 1,300 shares of common stock for $44 per share. Purchase 420 shares of treasury stock for $37 per share. Resell 220 shares of treasury stock purchased on May 15 for $42 per share. Issue 220 shares of preferred stock for $47 per share. Declare a cash dividend on both common and preferred stock of $0.70 per share to all stockholders of record on December 15. (Hint: Dividenda are not paid on treasury stock.) December 31 Pay the cash dividends declared on December 1. October…arrow_forwardRequired information Problem 10-2B (Algo) Record equity transactions and indicate the effect on the balance sheet equation (LO10-2, 10-3, 10-4, 10-5) [The following information applies to the questions displayed below.] Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2024, 125 shares of preferred stock and 2,100 shares of common stock have been issued. The following transactions affect stockholders' equity during 2024: March 1 April 1 June 1 Issue 2,100 additional shares of common stock for $16 per share. Issue 175 additional shares of preferred stock for $31 per share. Declare a cash dividend on both common and preferred stock of $0.55 per share to all stockholders of record on June 15. June 30 Pay the cash dividends declared on June 1. August 1 Purchase 175 shares of common treasury stock for $13 per share. October 1 Reissue 125 shares of treasury stock purchased on August 1 for $15 per share. Nautical has the following…arrow_forward
- Exercise 19-17 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares se stock options [LO19-5, 19-6, 19-7, 19-8) On December 31, 2023, Berciair Incorporated had 360 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding On March 1, 2024, Berclair purchased 88 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2024. * Four million treasury shares were sold on October 1 .Net income for the year ended December 31, 2024, was $550 million Also outstanding at December 31 were 30 million incentive stock options granted to key executives on September 13, 2019. • The options were exercisable as of September 13, 2023, for 30 million common shares at an exercise price of $56 per share . During 2024, the market price of the common shares averaged $70 per share. Required: Compute Berclair's basic and diluted earnings per share for the year ended…arrow_forwardRequired information Problem 8-25 (Algo) Common and preferred stock-issuances and dividends LO 8-1, 8-2, 8-3 [The following information applies to the questions displayed below.] Homestead Oil Corporation was incorporated on January 1, 2022, and issued the following stock for cash: • 890,000 shares of no-par common stock were authorized; 150,000 shares were issued on January 1, 2022, at $17.00 per share. • 220,000 shares of $110 par value, 8.50% cumulative, preferred stock were authorized; 63,000 shares were issued on January 1, 2022, at $150 per share. • Net income for the years ended December 31, 2022 and 2023 was $1,210,000 and $2,680,000, respectively. • No dividends were declared or paid during 2022. However, on December 27, 2023, the board of directors of Homestead declared dividends of $1,640,000, payable on February 11, 2024, to holders of record as of January 16, 2024. Problem 8-25 (Algo) Part a - Journal Entry Prepare the journal entries to record each of the below…arrow_forwardExercise 19-17 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options [LO19-5, 19-6, 19-7, 19-8] On December 31, 2020, Berclair Inc. had 480 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 136 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $850 million. Also outstanding at December 31 were 30 million incentive stock options granted to key executives on September 13, 2013. The options were exercisable as of September 13, 2020, for 30 million common shares at an exercise price of $56 per share. During 2021, the market price of the common shares averaged $70 per share. Required: Compute Berclair's basic and diluted earnings per share for the year ended…arrow_forward
- Problem 8-26 (Algo) Treasury stock transactions LO 6 [The following information apples to the questions displayed below) On January 1, 2019, Metco Inc. reported 290,000 shares of $4 par value common stock as being issued and outstariding On March 24, 2019, Metco Inc. purchased for Its treasury 4,000 shares of its common stock at a price of $39.00 per share. On August 19, 2019, 590 of these treasury shares were sold for $42.50 per share. Metco's directors declared cash dividends of $0.30 per share during the second quarter and again during the fourth quarter, payable on June 30, 2019. and December 31, 2019, respectively. A 3% stock dividend was issued at the end of the year. There were no other transactions affecting common stock during the year. Problem 8-26 (Algo) Part d d. Calculate the total amount of cash dividends paid in the fourth quarter. Dividend paidarrow_forwardE15.9 (LO 1, 3) (Preferred Stock Entries and Dividends) Otis Thorpe Corporation has 10,000 shares of $100 par value, 8 %, preferred stock and 50, 000 shares of $10 par value common stock outstanding at December 31, 2020. Instructions Answer the questions in each of the following independent situations. a. If the preferred stock is cumulative and dividends were last paid on the preferred stock on December 31, 2017, (1) what are the dividends in arrears on December 31, 2020, and (2) how should these dividends be reported? b. If the preferred stock is convertible into seven shares of $10 par value common stock and 4,000 shares are converted, what entry is required for the conversion assuming the preferred stock was issued at par value? c. Ifthepreferredstockwasissuedat$107 pershare,howshould the preferredstockbereportedinthe stockholders' equity section?arrow_forwardExercise 18-13 (Algo) Treasury stock; weighted-average and FIFO cost [LO18-5] At December 31, 2023, the balance sheet of Meca International included the following shareholders' equity accounts: ($ in millions) $85 450 560 Shareholders' Equity Common stock, 85 million shares at $1 par Paid-in capital-excess of par Retained earnings Required: Assuming that Meca International views its share buybacks as treasury stock, record the appropriate journal entry for each of the following transactions: Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 1. On February 12, 2024, Meca reacquired 2 million common shares at $15 per share. 2. On June 9, 2025, Meca reacquired 3 million common shares at $10 per share. 3. On May 25, 2026, Meca sold 3 million treasury shares at $18 per share. Determine cost as the weighted-average cost of treasury shares. 4. For the…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)