ivable Equipment ated Depreciation Short Retail Stores nd Equity ble ck ($10 par value) ue ings Corporation $ 59,000 101,000 260,000 100,000 510,000 (240,000) 128,000 $ 918,000 $ 68,000 290,000 200,000 150,000 210,000 Retail Stores $ 39,000 81,000 125,000 70,000 320,000 (140,000) $ 495,000 $ 25,000 200,000 110,000 100,000 60,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies' balance sheets as of
December 31, 20X4, were as follows:
Assets
Cash
Accounts Receivable
Inventory
Land
Buildings and Equipment
Less: Accumulated Depreciation
Investment in Short Retail Stores
Total Assets
Liabilities and Equity
Accounts Payable
Bonds Payable
Preferred Stock ($10 par value)
Common Stock:
$10 par value
$5 par value
Retained Earnings
Total Liabilities and Equity
Punch Manufacturing
Corporation
$ 59,000
101,000
260,000
100,000
510,000
(240,000)
128,000
$918,000
Basic earnings per share
Diluted earnings per share
$ 68,000
290,000
200,000
150,000
210,000
$ 918,000
Short
Retail Stores
$ 39,000
81,000
125,000
70,000
320,000
(140,000)
$ 495,000
$ 25,000
200,000
110,000
100,000
60,000
$ 495,000
Short Retail's 8 percent preferred stock is convertible into 15,000 shares of common stock, and its 10 percent bonds are convertible
into 8,000 shares of common stock. Short reported net income of $50,600 for 20X4 and paid dividends of $30,400.
Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reported
after-tax income, excluding investment income from Short, of $115,000 in 20X4 and paid dividends of $68,000. The companies file
separate tax returns and are subject to a 40 percent income tax.
Required:
Compute basic and diluted EPS for the consolidated entity. (Round your intermediate calculations and final answers to two decimal
places.)
Transcribed Image Text:Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies' balance sheets as of December 31, 20X4, were as follows: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Short Retail Stores Total Assets Liabilities and Equity Accounts Payable Bonds Payable Preferred Stock ($10 par value) Common Stock: $10 par value $5 par value Retained Earnings Total Liabilities and Equity Punch Manufacturing Corporation $ 59,000 101,000 260,000 100,000 510,000 (240,000) 128,000 $918,000 Basic earnings per share Diluted earnings per share $ 68,000 290,000 200,000 150,000 210,000 $ 918,000 Short Retail Stores $ 39,000 81,000 125,000 70,000 320,000 (140,000) $ 495,000 $ 25,000 200,000 110,000 100,000 60,000 $ 495,000 Short Retail's 8 percent preferred stock is convertible into 15,000 shares of common stock, and its 10 percent bonds are convertible into 8,000 shares of common stock. Short reported net income of $50,600 for 20X4 and paid dividends of $30,400. Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reported after-tax income, excluding investment income from Short, of $115,000 in 20X4 and paid dividends of $68,000. The companies file separate tax returns and are subject to a 40 percent income tax. Required: Compute basic and diluted EPS for the consolidated entity. (Round your intermediate calculations and final answers to two decimal places.)
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