Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 6% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 40 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%. 4. Basic earnings per share for 2015 is (rounded to the nearest penny) a. $1.57. b. $1.71. c. $1.80. d. $1.85. 5. Diluted earnings per share for 2015 is (rounded to the nearest penny) a. $1.41. b. $1.49. c. $1.53. d. $1.58. Show work following example below Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 5% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $2 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%. 24. Basic earnings per share for 2015 is (rounded to the nearest penny) [(400,000 – (20,000 * 2)) / 200,000 = 1.80 a. $1.47. b. $1.61. c. $1.67. d. $1.80. CORRECT ANSWER

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 6% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 40 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%.

4. Basic earnings per share for 2015 is (rounded to the nearest penny)

a. $1.57.

b. $1.71.

c. $1.80.

d. $1.85.

5. Diluted earnings per share for 2015 is (rounded to the nearest penny)

a. $1.41.

b. $1.49.

c. $1.53.

d. $1.58.

Show work following example below

Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 5% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $2 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%.

24. Basic earnings per share for 2015 is (rounded to the nearest penny)

[(400,000 – (20,000 * 2)) / 200,000 = 1.80

a. $1.47.

b. $1.61.

c. $1.67.

d. $1.80. CORRECT ANSWER

Diluted earnings per share for 2015 is (rounded to the nearest penny)

[400,000 + (1,000,000 * 0.05 * 0.7)] / [200,000 + 40,000 + (1,000 * 45)] = 1.53

a. $1.39.

b. $1.41.

c. $1.53. CORRECT ANSWER

d. $1.67.