On January 1, 2022, Shamrock SA issued 10-year, €1,870,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 15 ordinary shares of Shamrock. Shamrock's net income in 2023 was €462,800, and its tax rate was 40%. Interest expense on the liability component in 2023 was €130,900. The company had 104,000 ordinary shares outstanding throughout 2022. None of the bonds were converted in 2022. (a) Compute diluted earnings per share for 2022. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share (b) Compute diluted earnings per share for 2022, assuming the same facts as above, except that €1,040,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Shamrock. (Round answer to 2 decimal places, eg. 2.55.) Diluted earnings per share

On January 1, 2022, Shamrock SA issued 10-year, €1,870,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 15 ordinary shares of Shamrock. Shamrock's net income in 2023 was €462,800, and its tax rate was 40%. Interest expense on the liability component in 2023 was €130,900. The company had 104,000 ordinary shares outstanding throughout 2022. None of the bonds were converted in 2022. (a) Compute diluted earnings per share for 2022. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share (b) Compute diluted earnings per share for 2022, assuming the same facts as above, except that €1,040,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Shamrock. (Round answer to 2 decimal places, eg. 2.55.) Diluted earnings per share

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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On August 1, 2024, Perez Communications issued $44 million of 12% nonconvertible bonds at 105. The bonds are due on July 31, 2044. Each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase, for $30, one share of Perez Communications' no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2024, the market value of the common stock was $28 per share and the market value of each warrant was $6. In February 2035, when Perez common stock had a market price of $42 per share and the unamortized discount balance was $1 million, Interstate Containers exercised the warrants it held. Required: Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. Prepare the journal entries for both Perez and Interstate in February 2035, to record the exercise of the warrants.
Hanson Co. had 200,000 ordinary shares, 20,000 shares of convertible preference shares, and €1,000,000 of 10% convertible bonds outstanding during 2022. The preference shares are convertible into 40,000 ordinary shares. During 2022, Hanson paid dividends of €1.20 per share on the ordinary shares and €4 per share on the preference shares. Each €1,000 bond is convertible into 45 ordinary shares. The net income for 2022 was €800,000 and the income tax rate was 30%. Diluted earnings per share for 2022 is (rounded to the nearest penny)
Gerard Corporation has the following convertible bonds. A $100,000 convertible bond was issued at par on January 1, 2021, at 4%. The bond is convertible into 30,000 shares of common stock. Additionally, there was a convertible bond that was purchased on November 1, 2021, at par, for $200,000 with an interest rate of 6%, this bond is convertible into 20,000 shares of common stock. Both bonds pay interest annually. Gerard Corporation has total revenue of 800,000 and expenses of 400,000, which does not include interest expense or taxes. The tax rate is 40%. Additionally, the organization currently has 300,000 shares of common stock outstanding for the entire year. No dividends were paid in 2021. a. Calculate Earnings per share. b. Calculate Dilutive Earnings per share using the if converted method
On August 1, 2024, Gorczany Incorporated issued $11 million of 10-year, 10% bonds at 106. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $58, one share of Gorczany's no par common stock. On August 1, 2024, the market value of each warrant was $4.50 By what amount should Gorczany's shareholders' equity increase when the bonds are issued? A B C D E $1,485,000 $11,000 $11,660,000 $349,800 $11,000,000 1
PQ Co. had 200,000 ordinary shares, 20,000 shares of convertible preference shares, and $1,000,000 of 10% convertible bonds outstanding during 2021. The preference shares are convertible into 40,000 ordinary shares. During 2021, PQ paid dividends of $1.20 per share on the ordinary shares and $4 per share on the preference shares. Each $1,000 bond is convertible into 45 ordinary shares. The net income for 2021 was $800,000 and the income tax rate was 30%. Basic earnings per share for 2021 is (rounded to the nearest penny) Diluted earnings per share for 2021 is (rounded to the nearest penny)
Sheffield Inc. issued $15,200,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight- line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal place, e.g. 5,125. List all debit entries…
Windsor Inc. issued $3,840,000 of 11%, 10-year convertible bonds on June 1, 2020, at 99 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis.On April 1, 2021, $1,440,000 of these bonds were converted into 36,000 shares of $18 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued. (b) Prepare the entry to record the conversion on April 1, 2021. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.
On January 2, 2025, Sheridan Co. issued at par $290000 of 6% convertible bonds. Each $1000 bond is convertible into 60 shares. No bonds were converted during 2025. Sheridan had 106000 shares of common stock outstanding during 2025. Sheridan's 2025 net income was $179090 and its income tax rate was 30%. Sheridan's diluted earnings per share for 2025 is $1.69. $1.59. $1.55. O $1.45.
On January 1, 2024, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Required: Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. On July 1, 2029, when Gless’s common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method).
On December 31, 2021, HULK Corporation had outstanding ₱20,000,000 face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each ₱1,000 bond is convertible into 60 shares of HULK’s ₱10 par ordinary shares. The unamortized premium balance on December 31, 2021 is ₱350,000. The balance of Paid-in capital arising from bond conversion privilege is ₱640,000. On this date, an individual holding 2,000 of the bonds exercised the conversion privilege when the market value of HULK’s ordinary share was ₱18. What is the amount credited to share premium upon conversion of the bonds? * ₱ -0- ₱ 899,000 ₱ 800,000 ₱ 1,790,000
On August 1, 2024, Perez Communications issued $25 million of 10% nonconvertible bonds at 104. . The bonds are due on July 31, 2044. . Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Perez Communications' no par common stock. • Interstate Containers purchased 20% of the bond issue. . . On August 1, 2024, the market value of the common stock was $58 per share and the market value of each warrant was $8. In February 2035, when Perez common stock had a market price of $73 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. 2. Prepare the journal entries for both Perez and Interstate in February 2035, to record the exercise of the warrants.
On December 31, 2021, PISTACHIO Company had outstanding ₱20 million face value convertible bonds maturing on December 31, 2024. Interest is payable annually on December 31. Each ₱1,000 bond is convertible into 60 shares of PISTACHIO’s ₱P10 par ordinary shares. The unamortized premium balance on December 31, 2021 is ₱350,000. The balance of Share premium arising from bond conversion privilege is ₱640,000. On this date, assume that on December 31, 2021, PISTACHIO retired the ₱2,000,000 issue at 103. Without the conversion privilege, these bonds would have been sold at 102. A. What is the amount credited to share premium upon conversion of the bonds? B. How much is the gain or loss on retirement taken to profit or loss?