Answered: Cane company issued share capital of…

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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Lucas Company reports net income of $5,125 for the year ended December 31, 2019, its first year of operations. On January 4, 2019, Lucas issued 9,000 shares of common stock. On August 2, 2019, it issued an additional 3,000 shares of stock, resulting in 12,000 shares outstanding at year-end. During 2020, Lucas earned net income of $16,400. It issued 2,000 additional shares of stock on March 3, 2020, and declared and issued a 2-for-1 stock split on November 3, 2020, resulting in 28,000 shares outstanding at year-end. During 2021, Lucas earned net income of $23,520. The only common stock transaction during 2021 was a 20% stock dividend issued on July 2, 2021. Compute the 2019, 2020, and 2021 comparative basic earnings per share that would be disclosed in the 2021 annual report.
Atlanta Co. has 100,000 common shares outstanding as of January 1, 2020 and after-tax net income of $300,000 for 2020. On March 31, 2020 Atlanta Co repurchased 5,000 shares of its outstanding common stock. On October 1, 2020, the company issues an additional 50,000 shares of common stock. On October 31, 2020 the company distributed a stock dividend of 40%. The company also has 20,000 shares of 4% $10 par cumulative preferred stock outstanding. Assume that 5,000 shares of the preferred stock have the option to be converted to 2,000 shares of common stock at any time. In 2019 Atlanta Co. issued stock options to its 2 top executives that allow them to each purchase up to 1,000 shares of common stock at a purchase price of $25 per share. The current market price of Atlanta Co common stock is $40 per share and Atlanta Co.’s income tax rate is 30%. Compute the Basic EPS___________________________ Compute Fully Diluted EPS_________________________ *Urgent
At December 31, 2019, Hemington Company had 320,000 shares of common stock outstanding. Hemington sold 80,000 shares on October 1, 2020. Net income for 2020 was $1,985,000; the income tax rate was 35%. In addition, Hemington had the following debt and equity securities on its books at December 31, 2019. (a) 30,000 shares of $100 par, 8% cumulative preferred stock (b) 25,000 shares of 10% convertible cumulative preferred stock, par $100, sold at 110. Each share of preferred stock is convertible into three shares of common stock. (c) $1,500,000 face value of 9% bonds sold at par. (d) $2,500,000 face value of 7% convertible bonds sold to yield 8%. Unamortized bond discount is $150,000 at December 31, 2019. Each $1,000 bond is convertible into 22 shares of common stock. Also, options to purchase 20,000 shares of common stock were issued May 1, 2020. Exercise price is $20 per share; market value at date of option was $19; average market value for the year (and for the period…

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