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Crane Corporation is preparing earnings per share data for 2023. The net income for the year ended December 31, 2023, was $407,000 and there were 59,600 common shares outstanding during the entire year. Crane has the following two convertible securities outstanding: 10% convertible bonds (each $1,000 bond is convertible into 25 common shares) 3% convertible $100 par value preferred shares (each share is convertible into 2 common shares) (a1) Both convertible securities were issued at face value in 2020. There were no conversions during 2023, and Crane's income tax rate is 21%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. Calculate the income effect of the dividends on preferred shares. $103,000 Dividends on preferred shares $ 50,000

Crane Corporation is preparing earnings per share data for 2023. The net income for the year ended December 31, 2023, was $407,000 and there were 59,600 common shares outstanding during the entire year. Crane has the following two convertible securities outstanding: 10% convertible bonds (each $1,000 bond is convertible into 25 common shares) 3% convertible $100 par value preferred shares (each share is convertible into 2 common shares) (a1) Both convertible securities were issued at face value in 2020. There were no conversions during 2023, and Crane's income tax rate is 21%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. Calculate the income effect of the dividends on preferred shares. $103,000 Dividends on preferred shares $ 50,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Crane Corporation is preparing earnings per share data for 2023. The net income for the year ended December 31, 2023, was $407,000 and there were 59,600 common shares outstanding during the entire year. Crane has the following two convertible securities outstanding: 10% convertible bonds (each $1,000 bond is convertible into 25 common shares) 3% convertible $100 par value preferred shares (each share is convertible into 2 common shares) (a1) Both convertible securities were issued at face value in 2020. There were no conversions during 2023, and Crane's income tax rate is 21%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. Calculate the income effect of the dividends on preferred shares. $103,000 Dividends on preferred shares $ 50,000
Transcribed Image Text:Crane Corporation is preparing earnings per share data for 2023. The net income for the year ended December 31, 2023, was $407,000 and there were 59,600 common shares outstanding during the entire year. Crane has the following two convertible securities outstanding: 10% convertible bonds (each $1,000 bond is convertible into 25 common shares) 3% convertible $100 par value preferred shares (each share is convertible into 2 common shares) (a1) Both convertible securities were issued at face value in 2020. There were no conversions during 2023, and Crane's income tax rate is 21%. The preferred shares are cumulative. For simplicity, ignore the requirement to record the debt and equity components of the bonds separately. Calculate the income effect of the dividends on preferred shares. $103,000 Dividends on preferred shares $ 50,000
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