Calculate the EPS for Year 4 and the comparative EPS for Year 3. On 1 January Year 4, Mary had 5 million ordinary shares in issue. The followingtransactions in shares took place during the year.1 February A1 for 5 bonus issue1 AprilAl for 2 rights issue at $1 per share. The market price of theshares prior to the rights issue was $4.An issue at full market price of 800,000 shares.1 JuneIn Year 4 Mary made a profit before tax of $3,362,000. It paid ordinary dividends of$1,200,000 and preference dividends of $800,000 on 10% convertible preferenceshares. These convertible preference shares were issued at the start of Year 4 and areconvertible into ordinary shares at the following rates.On 31 December Year 7 15 shares for every $100 of preference shares.On 31 December Year 8 5 shares for every $100 of preference shares.Outstanding share options on 500,000 shares have also existed for a number of yearsThese can be exercised at a future date at a price of $3 per share. The average marketprice of shares in Year 3 was $4 and in Year 4 was $5.On 1 April Year 4 Mary issue $1,000,000 convertible 7% bonds. These are convertibleinto ordinary shares at the following rates.On 31 December Year 6 30 shares for every $100 of bondsOn 31 December Year 7 25 shares for every $100 of bondsOn 31 December Year 8 20 shares for every $100 of bondsTax rate for Year 4 is 30%. The reported EPS for Year 3 was $0.32.

Solution: EPS is calculated as below: EPS=Net Income-Preferred Dividend/Total outstanding common…

for 2 rights issue at SI per share. The market price of ti ares prior to the rights issue was $4. a issue at full market price of 800,000 shares. a profit before tax of $3,362,000. It paid ordinary dividends rence dividends of $800,000 on 10% convertible preferene ble preference shares were issued at the start of Year 4 and a

for 2 rights issue at SI per share. The market price of ti ares prior to the rights issue was $4. a issue at full market price of 800,000 shares. a profit before tax of $3,362,000. It paid ordinary dividends rence dividends of $800,000 on 10% convertible preferene ble preference shares were issued at the start of Year 4 and a

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

What can be understood from annual percentage rate (APR)?
3.Compute the under or overfunded ABO at the beginning and end of 2022.
Briefly define Average rate of change (AROC) and instantaneous rate of change (IROC) with respect to their rate of change and how to calculate this change
First holding period return need to be calculated, then annualized return.
Define future value of a single amount.
What does a current ratio show?
Identify the three items of information necessary to calculate the future value of a single amount.
Identify two problems of comparing investments using the payback time.
explain what is The current ratio with a comprehensive example.
What is horizon date?
analyze how the current rate method and the temporal method aff ect fi nancial statementsand ratios
Internal Rate of Return of Project B (expressed to two decimal places) using interpolation.