Kimchi Corporation reports the following information for 2023: Kimchi had 3,500,000 shares of common stock outstanding at the beginning of the year and issued 1,000,000 more shares on July 1, 2023. The firm also has 5,000 shares of $25 par, 5% cumulative preferred stock. Kimchi did not pay dividends in either 2022 or 2023. Convertible bonds were sold at par for $100,000 on April 1, 2023. The face value of each bond is $1,000, with an interest rate of 9%. Each bond is convertible into 250 shares of common stock. * 100,000 unexpired stock options were outstanding for the entire period during 2023. The options have an exercise price of $18 and the stock price at the end of the year is $28 per share. * Kimchi's 2023 after-tax net income is $3,500,000 and corporate tax rate is 21%. Required (show work and label answers), determine: 1. Basic earnings per share as reported by Kimchi on its 2023 income statement. 2. Diluted earnings per share as reported by Kimchi on its 2023 income statement (if anti-dilutive, show calculations to support that and then state that it would not be reported).
Kimchi Corporation reports the following information for 2023: Kimchi had 3,500,000 shares of common stock outstanding at the beginning of the year and issued 1,000,000 more shares on July 1, 2023. The firm also has 5,000 shares of $25 par, 5% cumulative preferred stock. Kimchi did not pay dividends in either 2022 or 2023. Convertible bonds were sold at par for $100,000 on April 1, 2023. The face value of each bond is $1,000, with an interest rate of 9%. Each bond is convertible into 250 shares of common stock. * 100,000 unexpired stock options were outstanding for the entire period during 2023. The options have an exercise price of $18 and the stock price at the end of the year is $28 per share. * Kimchi's 2023 after-tax net income is $3,500,000 and corporate tax rate is 21%. Required (show work and label answers), determine: 1. Basic earnings per share as reported by Kimchi on its 2023 income statement. 2. Diluted earnings per share as reported by Kimchi on its 2023 income statement (if anti-dilutive, show calculations to support that and then state that it would not be reported).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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am. 130.
Transcribed Image Text:Kimchi Corporation reports the following information for 2023:
* Kimchi had 3,500,000 shares of common stock outstanding at the beginning of the year and
issued 1,000,000 more shares on July 1, 2023. The firm also has 5,000 shares of $25 par, 5%
cumulative preferred stock. Kimchi did not pay dividends in either 2022 or 2023.
Convertible bonds were sold at par for $100,000 on April 1, 2023. The face value of each bond is
$1,000, with an interest rate of 9%. Each bond is convertible into 250 shares of common stock.
* 100,000 unexpired stock options were outstanding for the entire period during 2023. The options
have an exercise price of $18 and the stock price at the end of the year is $28 per share.
Kimchi's 2023 after-tax net income is $3,500,000 and corporate tax rate is 21%.
Required (show work and label answers), determine:
1. Basic earnings per share as reported by Kimchi on its 2023 income statement.
2. Diluted earnings per share as reported by Kimchi on its 2023 income statement (if anti-dilutive,
show calculations to support that and then state that it would not be reported).
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