On January 1, 2025, Crocker Company issued 10-year, $2,000,000 face value, 6% bonds, at par. Each $1,000 bond is convertibleinto 15 shares of Crocker common stock. Crocker's net income in 2025 was $400,000, and its tax rate was 20%. The companyhad 100,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025.a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.)Diluted earnings per share $b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $1,000,000 of 6% convertiblepreferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Crocker commonstock. (Round answer to 2 decimal places, e.g. 2.55.)Diluted earnings per share $

The earnings per share which is computed on the basis of convertible securities is classified as…

Answered: On January 1, 2025, Crocker Company…

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 May 1, 2021, Swifty Corporation issued $1410000 of 8% bonds at 104, which are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Swifty's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 95. On May 1, 2021, the fair value of Swifty's common stock was $35 per share and of the warrants was $2. On May 1, 2021, Swifty should credit Paid-in Capital from Stock Warrants for $59248. O $55048. O $102448. O $56400.
On September 1, 2025, Sands Company sold at 104 (plus accrued interest) 4,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $15 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No fair value can be determined for the Sands Company bonds. Interest is payable on December 1 and June 1. Prepare in general journal format the entry to record the issuance of the bonds. (List all debit entries before credit entries. 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.) Date September 1,2025 Account Titles and Explanation Debit Credit 10
On July 1, 2025, Crane Corporation issued $2,500,000 of 9% bonds payable in 20 years. The bonds include detachable warrants giving the bondholder the right to purchase for $30 one share of $1 par value common stock at any time during the next 10 years. The bonds were sold for $2,500,000. The value of the warrants at the time of issuance was $75,000. Prepare the journal entry to record this transaction. (List all debit entries before credit entries. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1, 2025
On June 30, 2019 Golf Green Inc. sold 12,000 of its $1,000 face value 10-year, 6% bonds when the market rate of interest was 8%. Interest payments are made on June 30th and Jan 1st each year. Golf Green follows IFRS. On May 1, 2021 Golf Green extinguished 3,000 of the bonds by issuing 40,000 common shares. At this time the accrued interest was paid to the bondholders whose bonds were being extinguished. In addition, to the bond retirement Golf Green issued an additional 10,000 new shares at $25 each. Prepare journals entries for the bond issue, payment of semi-annual interest, year-end adjusting entry, the retirement of the bonds and the issue of the additional shares. The company has a Dec 31 year end.
On May 1, 2025, Sunland Co. issued $1590000 of 8% bonds at 102. The bonds are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Sunland's common stock, $15 par value, were attached to each $1000 bond. The bonds without the warrants would sell at 96. On May 1, 2025, the fair value of Sunland's common stock was $35 per share and of the warrants was $2. On May 1, 2025, Sunland should credit Paid-in Capital from Stock Warrants for O $60672. O $63600. O $64872. O $95400.
Dream Corporation reported net income of $44,000 for 2019. The company has 10,000 shares of common stock issued and outstanding for all of 2019 and no preferred stock. During 2018, Dream issued $400,000 of 8% convertible bonds at par value. Each $1,000 bond can be converted into 24 shares of common stock. No bonds have been converted as of December 31, 2019. Dream has a 30% tax rate. Required: 1. Calculate the earnings per share amounts that Dream should disclose on its 2019 income statement. If required, round your answer to two decimal places.
On January 1, 2024, Gless Textiles issued $10 million of 7%, 20-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. Questions: 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 January 1, 2019, Scutaro Company issued 10-year, $200,000 face value, 6% bonds at par (payable annually on January 1). Each $1,000 bond is convertible into 30 shares of Scutaro $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2020. Scutaro also has adopted a stock-option plan that granted options to key executives to purchase 4,000 shares of the company's common stock. The options were granted on January 2, 2019, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company (the service period is 2 years). The options expired 6 years from the date of grant. The option price was set at $4, and the fair value option-pricing model determines the total compensation expense to be $18,000. All of the options were exercised during the year 2021: 3,000 on January 3 when the market price was $6, and 1,000 on…
On April 1, 2020, Oriole Company sold 20700 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2021, Headland took advantage of favorable prices of its stock to extinguish 4800 of the bonds by issuing 158,400 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $30 per share on March 1, 2021. Prepare the journal entries needed on the books of Headland Company to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) April 1, 2020: issuance of the bonds. (b) October 1, 2020: payment of…
On July 1, 2019, Salem Corporation issued $3.3 million of 9% bonds payable in 10 years. The bonds pay interest semiannually. The bonds include detachable warrants giving the bondholder the right to purchase for $33, one share of $1 par value common stock at any time during the next 10 years. Salem sold the bonds for $3.3 million. The value of the warrants at the time of issuance was $132,000. Required: Prepare in general journal format the entry to record the issuance of the bonds.
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12) On April 1, 2021, ABC Co. issued at par $10,000 of 6% bonds convertible in total into 1,000 shares of ABC's common stock. No bonds were converted during 2021. Throughout 2021, ABC had 1,000 shares of common stock outstanding. ABC's 2021 net income was $4,500, and its income tax rate is 20%. ABC's diluted earnings per share for 2021 would be (rounded to the nearest penny)?

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