### Case Study: BJB and Spectre Companies#### Background Information- **Date**: January 1st, 2015- **Transaction**: The Bond James Bond (BJB) Company acquired all voting stock of Spectre Company at book value.- **2022 Event**: Spectre issued 500 shares of 6% cumulative preferred stock.#### Financial Position as of December 31st, 2022(No transactions between Spectre and BJB in 2022)| Account Description | BJB | Spectre ||------------------------------|------------|-----------|| Common Stock ($1 par) | $50,000 | $5,000 || Additional Paid-in Capital | $100,000 | $5,000 || Preferred Stock ($100 par) | $0 | $50,000 || Retained Earnings | $800,000 | $20,000 |#### Part 1: Financial Performance in 2022| Description | BJB | Spectre ||-----------------------------|------------|-----------|| Sales | $100,000 | $30,000 || Expenses | $40,000 | $12,000 || Net Income | $60,000 | $18,000 |**Required**: Calculate BJB's earnings per share (EPS) for 2022.#### Part 2: Preferred Stock ConversionThe preferred stock is convertible, and each share can be converted into 2 shares of Spectre Common Stock. Calculate BJB’s EPS for 2022 considering this conversion.**Diagrams and Graphs**: The provided table includes detailed information about the capital structure and income statement highlights for both BJB and Spectre, necessary for calculating earnings per share and understanding the financial relationship between these companies.

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1 On January 1st 2015, The Bond James Bond (BJB) Company purhcased all of the voting stock of the Spectre Company at book value 2 At the beginning of 2022, Spectre Company issued 500 shares of 6% cumulative preferred stock 3 On December 31st 2022 BJB and Spectre had the following (note: there were no transactions between Spectre and BJB in 2022) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Commonstock $1 par additional pic common preferred stock $100 par retained earnings Sales expenses net income BJB 50000 100000 0 Part 1: In 2022 (no transactions between the 2 companies) BJB sales expenses net income 800000 100000 40000 60000 Required: Calculate BJB's earnings per share (EPS) for 2022 Part 2: In 2022 (no transactions between the 2 companies) BJB 100000 40000 60000 Spectre 5000 5000 50,000 20000 Spectre 30000 12000 18000 Spectre 30000 12000 18000 Required: the preferred stock is convertible where each share of preferred stock can be converted into 2 shares of Spectre Common stock. Calculate BJB's earning per share (EPS) for 2022

1 On January 1st 2015, The Bond James Bond (BJB) Company purhcased all of the voting stock of the Spectre Company at book value 2 At the beginning of 2022, Spectre Company issued 500 shares of 6% cumulative preferred stock 3 On December 31st 2022 BJB and Spectre had the following (note: there were no transactions between Spectre and BJB in 2022) 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Commonstock $1 par additional pic common preferred stock $100 par retained earnings Sales expenses net income BJB 50000 100000 0 Part 1: In 2022 (no transactions between the 2 companies) BJB sales expenses net income 800000 100000 40000 60000 Required: Calculate BJB's earnings per share (EPS) for 2022 Part 2: In 2022 (no transactions between the 2 companies) BJB 100000 40000 60000 Spectre 5000 5000 50,000 20000 Spectre 30000 12000 18000 Spectre 30000 12000 18000 Required: the preferred stock is convertible where each share of preferred stock can be converted into 2 shares of Spectre Common stock. Calculate BJB's earning per share (EPS) for 2022

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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