Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During the entire year, there were 502,000 common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.09 cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000, 6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000, 4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37%. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 2012 Bonds Incremental Numerator Effect $ Incremental Denominator Effect Calculate the after-tax interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted tA $ EPS Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 8% Bonds Incremental Numerator Effect $ Incremental Denominator Effect EPS Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Class A preferred shares Incremental Denominator Effect EPS Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Incremental Denominator Effect EPS Class B preferred shares Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred shares Class B preferred shares +A cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non - cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000,6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000,4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37 %. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Calculate the after-tax interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred shares Class B preferred shares (2009 IS ACTUALLY 2012 & 2010 IS ACTUALLY 2013 PLEASE ANSWER THESE ILL GIVE YOU MANY LIKES)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During the entire year, there were 502,000
common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.09
cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000
$6.09 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a
$1,000,000, 6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a
$1,000,000, 4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this
year. Novak's tax rate is 37%.
Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.)
Potentially dilutive security
2012 Bonds
Incremental
Numerator Effect
$
Incremental
Denominator Effect
Calculate the after-tax interest paid on the 2010 bonds.
After-tax interest on 2010 bonds converted
tA
$
EPS
Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.)
Potentially dilutive security
8% Bonds
Incremental
Numerator Effect
$
Incremental
Denominator Effect
EPS
Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)
Potentially dilutive security
Incremental
Numerator Effect
Class A preferred shares
Incremental
Denominator Effect
EPS
Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)
Potentially dilutive security
Incremental
Numerator Effect
Incremental
Denominator Effect
EPS
Class B preferred shares
Rank the potentially dilutive securities from most dilutive to least dilutive.
2009 bonds
2010 bonds
Class A preferred shares
Class B preferred shares
+A
Transcribed Image Text:Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During the entire year, there were 502,000 common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.09 cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000, 6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000, 4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37%. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 2012 Bonds Incremental Numerator Effect $ Incremental Denominator Effect Calculate the after-tax interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted tA $ EPS Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 8% Bonds Incremental Numerator Effect $ Incremental Denominator Effect EPS Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Class A preferred shares Incremental Denominator Effect EPS Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Potentially dilutive security Incremental Numerator Effect Incremental Denominator Effect EPS Class B preferred shares Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred shares Class B preferred shares +A
cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There
were 103,000 $6.09 Class B non - cumulative preferred shares outstanding that were also convertible at a rate of 1:1.
Novak had outstanding a $1,000,000,6% bond issued at par in 2012 that was convertible to 21,000 common shares.
The company also had outstanding a $1,000,000,4% bond issued at par in 2013 that was convertible to 26,000
common shares. No dividends were declared or paid this year. Novak's tax rate is 37 %. Determine an incremental per
share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Calculate the after-tax
interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted Determine an incremental per share
effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Determine an incremental per
share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Determine an
incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.)
Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred
shares Class B preferred shares (2009 IS ACTUALLY 2012 & 2010 IS ACTUALLY 2013 PLEASE ANSWER THESE ILL GIVE
YOU MANY LIKES)
Transcribed Image Text:cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non - cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000,6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000,4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37 %. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Calculate the after-tax interest paid on the 2010 bonds. After-tax interest on 2010 bonds converted Determine an incremental per share effect for 2010 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Determine an incremental per share effect for Class A preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Determine an incremental per share effect for Class B preferred shares. (Round earnings per share to 2 decimal places, e.g. 15.25.) Rank the potentially dilutive securities from most dilutive to least dilutive. 2009 bonds 2010 bonds Class A preferred shares Class B preferred shares (2009 IS ACTUALLY 2012 & 2010 IS ACTUALLY 2013 PLEASE ANSWER THESE ILL GIVE YOU MANY LIKES)
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