December 31, 2025, Dow Steel Corporation au 0,000 shares of common stock and 505,000 shares of 9%, nonicumulative, convertible preferred stock issued and outstanding. • Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and preferred shareholders, respectively, on December 15, 2024. On February 28, 2024, Dow sold 64,000 common shares. In keeping with its long-term share repurchase plan, 7,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2024, was $2,350,000. The income tax rate is 25%. Also, as a part of a 2023 agreement for the acquisition of Merrill Cable Company, another 26,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2025, if Merrill's 2025 net income is at least $550,000. In 2024, Merrill's net income was $680,000. As part of an incentive compensation plan, Dow granted incentive stock options to division managers on December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. ormation concerning the number of options granted and common share prices follows: Date Granted ecember 31, 2022 ecember 31, 2023 ecember 31, 2024 Options Granted (adjusted for the stock dividend) 12,000 7,000 10,500 Share Price $ 16 $ 25 $24 The market price of the common stock averaged $24 per share during 2024. • On July 12, 2022, Dow issued $900,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend). quired: mpute Dow's basic and diluted earnings per share for the year ended December 31, 2024.
December 31, 2025, Dow Steel Corporation au 0,000 shares of common stock and 505,000 shares of 9%, nonicumulative, convertible preferred stock issued and outstanding. • Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and preferred shareholders, respectively, on December 15, 2024. On February 28, 2024, Dow sold 64,000 common shares. In keeping with its long-term share repurchase plan, 7,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2024, was $2,350,000. The income tax rate is 25%. Also, as a part of a 2023 agreement for the acquisition of Merrill Cable Company, another 26,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2025, if Merrill's 2025 net income is at least $550,000. In 2024, Merrill's net income was $680,000. As part of an incentive compensation plan, Dow granted incentive stock options to division managers on December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. ormation concerning the number of options granted and common share prices follows: Date Granted ecember 31, 2022 ecember 31, 2023 ecember 31, 2024 Options Granted (adjusted for the stock dividend) 12,000 7,000 10,500 Share Price $ 16 $ 25 $24 The market price of the common stock averaged $24 per share during 2024. • On July 12, 2022, Dow issued $900,000 of convertible 8% bonds at face value. Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend). quired: mpute Dow's basic and diluted earnings per share for the year ended December 31, 2024.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 10MC
Related questions
Question
December 31, 2023, Dow Steel Corporation had 650,000 shares of common stock and 305,000 shares of 9%, noncumulative, nonconvertible
Transcribed Image Text:On December 31, 2023, Dow Steel Corporation nau oo0,000 shares of common stock and 505,000 shares of 976, noricumulative,
nonconvertible preferred stock issued and outstanding.
• Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $450,000 and $74,000 to common and
preferred shareholders, respectively, on December 15, 2024.
• On February 28, 2024, Dow sold 64,000 common shares.
In keeping with its long-term share repurchase plan, 7.000 shares were retired on July 1.
• Dow's net income for the year ended December 31, 2024, was $2,350,000.
• The income tax rate is 25%.
.
Also, as a part of a 2023 agreement for the acquisition of Merrill Cable Company, another 26,000 shares (already adjusted for
the stock dividend) are to be issued to former Merrill shareholders on December 31, 2025, if Merrill's 2025 net income is at least
$550,000.
• In 2024, Merrill's net income was $680,000.
Saved
• As part of an incentive compensation plan, Dow granted incentive stock options to division managers on December 31 of the
current and each of the previous two years.
• Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant
and can be exercised one year from that date.
Information concerning the number of options granted and common share prices follows:
Options Granted
(adjusted for the
stock dividend)
12,000
7,000
10,500
Date Granted
December 31, 2022
December 31, 2023
December 31, 2024
Share Price
$ 16
$ 25
$ 24
• The market price of the common stock averaged $24 per share during 2024.
• On July 12, 2022, Dow issued $900,000 of convertible 8% bonds at face value.
• Each $1,000 bond is convertible into 30 common shares (adjusted for the stock dividend).
Required:
Compute Dow's basic and diluted earnings per share for the year ended December 31, 2024.
Dow's basic
Dow's diluted
Note: Do not round Intermediate calculations. Except for per share amounts, enter your answers in thousands (I.e., 10,000 should
be entered as 10). Round "Earnings per share" answer to 2 decimal places.
Numerator + Denominator = Earnings per share
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