Kk122. 3456789 Long-term debtThe table below shows a partial view of Webster Corporation's balance sheet.10 Notes payable 10%111213 Total long-term debt14Stockholders' equity15 6% cumulative, convertible preferred stock, $100 par, 50,000 shares outstanding16 Common stock, $1 par, 600,000 shares outstanding17 Additional paid-in capital3210% convertible bonds payable12% convertible bonds payable33343528 g)29h)3031Webster CorporationBalance Sheet (partial)At December 31, 202118 Retained earnings192021 Notes and Assumptions December 31, 202122a) Options were granted in December 2020 to purchase 25,000 shares of common stock at $25 per share. The average market price of common stock during 2021 was $35 per share. All options are still outstanding at the end of 2021.b) Both the 10 percent and 12 percent convertible bonds were issued in 2020 at face value. Each convertible bond is convertible into 50 shares of common stock. (Each bond has a face value of $1,000.)2324 C)The 6 percent cumulative, convertible preferred stock was issued at the beginning of 2021 at par. Each share of preferred is convertible into one share of common stock.The average income tax rate is 20 percent.25 d)26e)27 f)Total stockholders' equity600,000 shares of common stock were outstanding during the entire year.Preferred dividends were not declared in 2021.Net income was $2,000,000 in 2021.No bonds or preferred stock were converted during 2021.$2,000,0002,500,0003,000,000$7,500,000Instructions:Calculate basic and diluted EPS for the year ended December 31, 2021. Your answer should include acalculation of basic EPS, the per share effect on EPS of all convertible instruments, the ranking of the pershare effects, and the recomputation of EPS for each security to arrive at your answer for diluted EPS. Youmust clearly show your final answer for Basic and Diluted EPS.5,000,000600,0002,500,0008,500,000$16,600,000

Basic EPS is calculated by taking net income minus any preferred stock dividends and dividing it by…

4 5 6 7 8 9 Long-term debt 10 11 12 13 14 15 6% cumulative, convertible preferred stock, $100 par, 50,000 shares outstanding 16 Common stock, $1 par, 600,000 shares outstanding 19 17 20 17 Additional paid-in capital 18 Retained earnings Total stockholders' equity The table below shows a partial view of Webster Corporation's balance sheet. Webster Corporation Balance Sheet (partial) At December 31, 2021 21 21 22 22 23 Notes payable 10% 10% convertible bonds payable 12% convertible bonds payable Total long-term debt Stockholders' equity Notes and Assumptions December 31, 2021 a) Options were granted in December 2020 to purchase 25,000 shares of common stock at $25 per share. The average market price of common stock during 2021 was $35 per share. All options are still outstanding at the end of 2021. b) Both the 10 percent and 12 percent convertible bonds were issued in 2020 at face value. Each convertible bond is convertible into 50 shares of common stock. (Each bond has a face value of $1,000.) 24 C) The 6 percent cumulative, convertible preferred stock was issued at the beginning of 2021 at par. Each share of preferred is convertible into one share of common stock. 24 25 d) The average income tax rate is 20 percent. 26 e) 600,000 shares of common stock were outstanding during the entire year. 27 f) Preferred dividends were not declared in 2021. Net income was $2,000,000 in 2021. No bonds or preferred stock were converted during 2021. 32 28 g) 29 h) 30 31 33 24 $2,000,000 2,500,000 3,000,000 $7,500,000 Instructions: Calculate basic and diluted EPS for the year ended December 31, 2021. Your answer should include a calculation of basic EPS, the per share effect on EPS of all convertible instruments, the ranking of the per share effects, and the recomputation of EPS for each security to arrive at your answer for diluted EPS. You must clearly show your final answer for Basic and Diluted EPS. 5,000,000 600,000 2,500,000 8,500,000 $16,600,000

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q