Computing Basic and Diluted EPS, Convertible Bonds,
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- Given the following year-end information, compute Greenwood Corporations basic and diluted earnings per share. Net income, 15,000 The income tax rate, 30% 4,000 shares of common stock were outstanding the entire year. shares of 10%, 50 par (and issuance price) convertible preferred stock were outstanding the entire year. Dividends of 2,500 were declared on this stock during the year. Each share of preferred stock is convertible into 5 shares of common stock.arrow_forwardNutritious Pet Food Companys board of directors declares a 2-for-1 stock split on June 30 when the stocks market value per share is $30. At that time, there are 10,000 shares of $1 par value common stock outstanding (none held in treasury). What is the new par value of the shares and how many shares are outstanding after the split? What is the total amount of equity before and after the split?arrow_forwardNutritious Pet Food Companys board of directors declares a 2-for-1 stock split on June 30 when the stocks market value per share is $30. At that time, there are 10,000 shares of $1 par value common stock outstanding (none held in treasury). What is the new par value of the shares and how many shares are outstanding after the split?arrow_forward
- Stockholders equity accounts and other related accounts of Gonzales Company as of January 1, 20--, the beginning of its fiscal year, are shown below. (a)Received 20,000 for the balance due on subscriptions for preferred stock with a par value of 40,000 and issued the stock. (b)Purchased 10,000 shares of common treasury stock for 18 per share. (c)Received subscriptions for 10,000 shares of common stock at 19 per share, collecting down payments of 45,000. (d)Issued 15,000 shares of common stock in exchange for land with a fair market value of 290,000. (e)Sold 5,000 shares of common treasury stock for Si00,000. (f)Issued 10,000 shares of preferred stock at 11.50 per share, receiving cash. (g)Sold 3,000 shares of common treasury stock for 17 per share. REQUIRED 1. Prepare general journal entries for the transactions, identifying each transaction by letter. 2. Post the journal entries to appropriate T accounts. The cash account has a beginning balance of 300,000. 3. Prepare the stockholders equity section of the balance sheet as of December 31, 20--. Net income for the year was 825,000 and dividends of 400,000 were paid.arrow_forwardOutstanding Stock Lars Corporation shows the following information in the stockholders equity section of its balance sheet: The par value of common stock is S5, and the total balance in the Common Stock account is $225,000. There are 13,000 shares of treasury stock. Required: What is the number of shares outstanding? Use the following information for Exercises 10-58 and 10-59: Stahl Company was incorporated as a new business on January 1, 2019. The company is authorized to issue 600,000 shares of $2 par value common stock and 80,000 shares of 6%, S20 par value, cumulative preferred stock. On January 1, 2019, the company issued 75,000 shares of common stock for $15 per share and 5,000 shares of preferred stock for $25 per share. Net income for the year ended December 31, 2019, was $500,000.arrow_forwardRaun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.arrow_forward
- V6. On January 1, Stunt Corp. had outstanding convertible bonds with a face value of $1,000,000 and an unamortized discount of $100,000. On that date, the bonds were converted into 100,000 shares of $1 par stock. The market value on the date of conversion was $12 per share. The transaction will be accounted for with the book value method. By what amount will Stunt’s stockholders’ equity increase as a result of the bond conversion?arrow_forwardAt December 31, 19x4, Back Company had 350,000 shares of common stock outstanding. On September 1, 19x5, an additional 150,000 shares of common stock were issued. In addition, Back had P10,000,000 of 8 percent convertible bonds outstanding at December 31, 19x4, which are convertible into 200,000 shares of common stock. The bonds were considered potential common shares at the time of their issuance and no bonds were converted into common stock in 19x5. The net income tax rate was 50 percent, what should be the diluted earnings per share for the year ended December 31, 19x5? (SHOW SOLUTION) a. P4.33 b. P5.00 c. P5.67 d. P7.50 If the accounts receivable turnover is five times, then the average number of days to collect accounts receivable is approximately: a. 50 days b. 65 days c. 70 days d. 91 daysarrow_forwardFiler Manufacturing has 9,839,969 shares of common stock outstanding. The current share price is $57.28, and the book value per share is $4.24. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $53,310,475, has a 0.07 coupon, matures in 13 years and sells for 81 percent of par. The second issue has a face value of $67,670,598, has a 0.07 coupon, matures in 8 years, and sells for 85 percent of par. What is Filer's weight of equity on a market value basis? Enter the answer with 4 decimals (e.g. 0.2345)arrow_forward
- Atlanta Company provided the following information at the beginning of the current year:Ordinary share capital, P10 par value, 800,000 shares 8,000,000 12% convertible bonds issued at face value, each P1,000 bond is convertible into 80 ordinary shares 5,000,000 May 1 Issued 90,000 ordinary shares for P30 per share.July 1 Purchased 100,000 ordinary shares of treasury at P35 per share. October 1 Converted P2,000,000 face value of bondsDecember 1 Net income for the year was P9,500,000. The tax rate is 30% What amount should be reported as basic earnings per share? What amount should be reported as diluted earnings per share?arrow_forwardFiler Manufacturing has 5,685,822 shares of common stock outstanding. The current share price is $38.15, and the book value per share is $8.77. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face value of $58,687,458, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $58,030,315, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $0.66 and the dividend growth rate is 0.04. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 0.33. What is Filer's WACC? Enter the answer with 4 decimals (e.g. 0.2345)arrow_forward
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