Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 20, Problem 20.1P
a.
To determine
The value of basic and diluted earnings per share of the company.
Giveninformation:
Common shares outstanding are 320,000.
Additional shares issued on August 1 are 120,000 shares.
4% non cumulative
Preferred shared can be converted into 10,000 shares of common stock.
Outstanding shares of convertible options are 180,000 shares.
Effective tax rate is 40%.
Net income is $2,800,000.
b.
To determine
To prepare: The earnings per share disclosure on the income statement beginning with income of continuous operations.
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JackieStamping began the current year with 470,000common shares outstanding and issued an additional 120,000shares on September1. The firm has $11,300,000, 1.5% convertible bonds on June 30 (i.e., $169,500coupon interest annually), which are convertible into 331,000 shares of common stock. The firm issued the bonds at par and did not convert any during the current year. It also had $1,170,000 par value, 4%nonconvertible, noncumulative preferred stock outstanding for the full year and declared dividends for the current year. The company is subject to a 40%effective tax rate and net income is $4,100,000.
RequirementBased on this information, compute basic and diluted earnings per share for the current year.
Chapter 20 Solutions
Intermediate Accounting (2nd Edition)
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