On June 1, 2021, Gustav Corp. and Gabby Limited merged to form Carla Vista Inc. A total of 680,000 shares were issued to complete the merger. The new corporation uses the calendar year as its fiscal year. On April 1, 2023, the company issued an additional 340,000 shares for cash. All 1.02 million shares were outstanding on December 31, 2023. Carla Vista also issued $510,000 of 20-year, 10% convertible bonds at par on July 1, 2023. Each $1,000 bond converts to 45 common shares at the annual interest date. None of the bonds have been converted to date. If the bonds had been issued without the conversion feature, the annual interest rate would have been 11%. Carla Vista is preparing its annual financial statements for the fiscal year ended December 31, 2023. The financial statements will show earnings per share figures based on a reported after-tax net income of $1,600,000. (The tax rate is 30%.)
On June 1, 2021, Gustav Corp. and Gabby Limited merged to form Carla Vista Inc. A total of 680,000 shares were issued to complete the merger. The new corporation uses the calendar year as its fiscal year. On April 1, 2023, the company issued an additional 340,000 shares for cash. All 1.02 million shares were outstanding on December 31, 2023. Carla Vista also issued $510,000 of 20-year, 10% convertible bonds at par on July 1, 2023. Each $1,000 bond converts to 45 common shares at the annual interest date. None of the bonds have been converted to date. If the bonds had been issued without the conversion feature, the annual interest rate would have been 11%. Carla Vista is preparing its annual financial statements for the fiscal year ended December 31, 2023. The financial statements will show earnings per share figures based on a reported after-tax net income of $1,600,000. (The tax rate is 30%.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On June 1, 2021, Gustav Corp. and Gabby Limited merged to form Carla Vista Inc. A total of 680,000 shares were issued to complete
the merger. The new corporation uses the calendar year as its fiscal year.
On April 1, 2023, the company issued an additional 340,000 shares for cash. All 1.02 million shares were outstanding on December 31,
2023. Carla Vista also issued $510,000 of 20-year, 10% convertible bonds at par on July 1, 2023. Each $1,000 bond converts to 45
common shares at the annual interest date. None of the bonds have been converted to date. If the bonds had been issued without the
conversion feature, the annual interest rate would have been 11%.
Carla Vista is preparing its annual financial statements for the fiscal year ended December 31, 2023. The financial statements will
show earnings per share figures based on a reported after-tax net income of $1,600,000. (The tax rate is 30%.)
Determine for 2023 the number of shares to be used in calculating: 1. Basic earnings per share, 2. Diluted earnings per share.
1.
Your answer is correct.
2.
Number of shares for basic earnings per share
Number of shares for diluted earnings per share
935000 shares
946475
shares
Transcribed Image Text:-
Your answer is partially correct.
Determine for 2023 the earnings figures to be used in calculating: 1. Basic earnings per share, 2. Diluted earnings per share. (Use a
financial calculator or Excel functions in arriving at the calculations for the bonds.) (Round factor values to 5 decimal places,
e.g. 1.25124 and all other answers to O decimal places, e.g. 5,275.)
1. Earnings for basic earnings per share
2.
Earnings for diluted earnings per share
eTextbook and Media
$
$
1600000
1617850
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