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Plug Corporation holds 80 percent of Socket Company's common stock. The following balance sheet data are presented for December 31, 20X7: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Socket Company Total Assets Liabilities and Equities Accounts Payable Bonds Payable Preferred Stock ($100 par value) Common Stock ($10 par value) Retained Earnings Total Liabilities and Equities Plug Corporation $ 100,000 150,000 300,000 100,000 2,250,000 (850,000) 600,000 $2,650,000 $ 200,000 800,000 1,000,000 650,000 $2,650,000 $ Socket Company 90,000 220,000 300,000 290,000 900,000 (250,000) $1,550,000 $ 100,000 500,000 200,000 400,000 350,000 $1,550,000 Socket reported net income of $115,000 in 20X7 and paid dividends of $60,000. Its bonds have an annual interest rate of 8 percent and are convertible into 30,000 common shares. Its preferred shares pay an 11 percent annual dividend and convert into 20,000 shares of common stock. In addition, Socket has warrants outstanding for 10,000 shares of common stock at $8 per share. The 20X7 average price of Socket common shares was $40. Plug reported income of $300,000 from its own operations for 20X7 and paid dividends of $200,000. Its 10 percent bonds convert into 25,000 shares of its common stock. The companies file separate tax returns and are subject to income taxes of 40 percent. Required: Compute basic and diluted EPS for the consolidated entity for 20X7. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Plug Corporation holds 80 percent of Socket Company's common stock. The following balance sheet data are presented for December 31, 20X7: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Socket Company Total Assets Liabilities and Equities Accounts Payable Bonds Payable Preferred Stock ($100 par value) Common Stock ($10 par value) Retained Earnings Total Liabilities and Equities Plug Corporation $ 100,000 150,000 300,000 100,000 2,250,000 (850,000) 600,000 $2,650,000 $ 200,000 800,000 1,000,000 650,000 $2,650,000 $ Socket Company 90,000 220,000 300,000 290,000 900,000 (250,000) $1,550,000 $ 100,000 500,000 200,000 400,000 350,000 $1,550,000 Socket reported net income of $115,000 in 20X7 and paid dividends of $60,000. Its bonds have an annual interest rate of 8 percent and are convertible into 30,000 common shares. Its preferred shares pay an 11 percent annual dividend and convert into 20,000 shares of common stock. In addition, Socket has warrants outstanding for 10,000 shares of common stock at $8 per share. The 20X7 average price of Socket common shares was $40. Plug reported income of $300,000 from its own operations for 20X7 and paid dividends of $200,000. Its 10 percent bonds convert into 25,000 shares of its common stock. The companies file separate tax returns and are subject to income taxes of 40 percent. Required: Compute basic and diluted EPS for the consolidated entity for 20X7. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Plug Corporation holds 80 percent of Socket Company's common stock. The following balance sheet data are presented for December 31, 20X7: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Socket Company Total Assets Liabilities and Equities Accounts Payable Bonds Payable Preferred Stock ($100 par value) Common Stock ($10 par value) Retained Earnings Total Liabilities and Equities Plug Corporation $ 100,000 150,000 300,000 100,000 2,250,000 Basic earnings per share Diluted earnings per share (850,000) 600,000 $2,650,000 $ 200,000 800,000 1,000,000 650,000 $2,650,000 $ Socket Company 90,000 220,000 300,000 290,000 900,000 (250,000) $1,550,000 $ 100,000 500,000 200,000 400,000 350,000 $1,550,000 Socket reported net income of $115,000 in 20X7 and paid dividends of $60,000. Its bonds have an annual interest rate of 8 percent and are convertible into 30,000 common shares. Its preferred shares pay an 11 percent annual dividend and convert into 20,000 shares of common stock. In addition, Socket has warrants outstanding for 10,000 shares of common stock at $8 per share. The 20X7 average price of Socket common shares was $40. Plug reported income of $300,000 from its own operations for 20X7 and paid dividends of $200,000. Its 10 percent bonds convert into 25,000 shares of its common stock. The companies file separate tax returns and are subject to income taxes of 40 percent. Required: Compute basic and diluted EPS for the consolidated entity for 20X7. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Transcribed Image Text:Plug Corporation holds 80 percent of Socket Company's common stock. The following balance sheet data are presented for December 31, 20X7: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Socket Company Total Assets Liabilities and Equities Accounts Payable Bonds Payable Preferred Stock ($100 par value) Common Stock ($10 par value) Retained Earnings Total Liabilities and Equities Plug Corporation $ 100,000 150,000 300,000 100,000 2,250,000 Basic earnings per share Diluted earnings per share (850,000) 600,000 $2,650,000 $ 200,000 800,000 1,000,000 650,000 $2,650,000 $ Socket Company 90,000 220,000 300,000 290,000 900,000 (250,000) $1,550,000 $ 100,000 500,000 200,000 400,000 350,000 $1,550,000 Socket reported net income of $115,000 in 20X7 and paid dividends of $60,000. Its bonds have an annual interest rate of 8 percent and are convertible into 30,000 common shares. Its preferred shares pay an 11 percent annual dividend and convert into 20,000 shares of common stock. In addition, Socket has warrants outstanding for 10,000 shares of common stock at $8 per share. The 20X7 average price of Socket common shares was $40. Plug reported income of $300,000 from its own operations for 20X7 and paid dividends of $200,000. Its 10 percent bonds convert into 25,000 shares of its common stock. The companies file separate tax returns and are subject to income taxes of 40 percent. Required: Compute basic and diluted EPS for the consolidated entity for 20X7. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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