Poppy Corporation owns 60 percent of Seed Company’s common shares. Balance sheet data for the companies on December 31, 20X2, are as follows: Poppy Corporation Seed Company Assets Cash $ 86,000 $ 31,000 Accounts Receivable 83,000 53,000 Inventory 114,000 91,000 Buildings and Equipment 680,000 350,000 Less: Accumulated Depreciation (210,000 ) (80,000 ) Investment in Seed Company Stock 138,000 Total Assets $ 891,000 $ 445,000 Liabilities and Owners’ Equity Accounts Payable $ 121,000 $ 15,000 Bonds Payable 250,000 200,000 Common Stock ($10 par value) 300,000 100,000 Retained Earnings 220,000 130,000 Total Liabilities and Owners’ Equity $ 891,000 $ 445,000 The bonds of Poppy Corporation and Seed Company pay annual interest of 8 percent and 10 percent, respectively. Poppy’s bonds are not convertible. Seed’s bonds can be converted into 10,000 shares of its company stock any time after January 1, 20X1. An income tax rate of 40 percent is applicable to both companies. Seed reports net income of $39,000 for 20X2 and pays dividends of $18,000. Poppy reports income from its separate operations of $51,000 and pays dividends of $21,000. Required: Compute basic and diluted EPS for the consolidated entity for 20X2. (Round your answers to 2 decimal places.) a. basic earning per share b. Diluted earnings per share
Poppy Corporation owns 60 percent of Seed Company’s common shares. Balance sheet data for the companies on December 31, 20X2, are as follows: Poppy Corporation Seed Company Assets Cash $ 86,000 $ 31,000 Accounts Receivable 83,000 53,000 Inventory 114,000 91,000 Buildings and Equipment 680,000 350,000 Less: Accumulated Depreciation (210,000 ) (80,000 ) Investment in Seed Company Stock 138,000 Total Assets $ 891,000 $ 445,000 Liabilities and Owners’ Equity Accounts Payable $ 121,000 $ 15,000 Bonds Payable 250,000 200,000 Common Stock ($10 par value) 300,000 100,000 Retained Earnings 220,000 130,000 Total Liabilities and Owners’ Equity $ 891,000 $ 445,000 The bonds of Poppy Corporation and Seed Company pay annual interest of 8 percent and 10 percent, respectively. Poppy’s bonds are not convertible. Seed’s bonds can be converted into 10,000 shares of its company stock any time after January 1, 20X1. An income tax rate of 40 percent is applicable to both companies. Seed reports net income of $39,000 for 20X2 and pays dividends of $18,000. Poppy reports income from its separate operations of $51,000 and pays dividends of $21,000. Required: Compute basic and diluted EPS for the consolidated entity for 20X2. (Round your answers to 2 decimal places.) a. basic earning per share b. Diluted earnings per share
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Poppy Corporation owns 60 percent of Seed Company’s common shares.
| Poppy Corporation |
Seed Company |
|||||||||
| Assets | ||||||||||
| Cash | $ | 86,000 | $ | 31,000 | ||||||
| 83,000 | 53,000 | |||||||||
| Inventory | 114,000 | 91,000 | ||||||||
| Buildings and Equipment | 680,000 | 350,000 | ||||||||
| Less: |
(210,000 | ) | (80,000 | ) | ||||||
| Investment in Seed Company Stock | 138,000 | |||||||||
| Total Assets | $ | 891,000 | $ | 445,000 | ||||||
| Liabilities and Owners’ Equity | ||||||||||
| Accounts Payable | $ | 121,000 | $ | 15,000 | ||||||
| Bonds Payable | 250,000 | 200,000 | ||||||||
| Common Stock ($10 par value) | 300,000 | 100,000 | ||||||||
| 220,000 | 130,000 | |||||||||
| Total Liabilities and Owners’ Equity | $ | 891,000 | $ | 445,000 | ||||||
The bonds of Poppy Corporation and Seed Company pay annual interest of 8 percent and 10 percent, respectively. Poppy’s bonds are not convertible. Seed’s bonds can be converted into 10,000 shares of its company stock any time after January 1, 20X1. An income tax rate of 40 percent is applicable to both companies. Seed reports net income of $39,000 for 20X2 and pays dividends of $18,000. Poppy reports income from its separate operations of $51,000 and pays dividends of $21,000.
Required:
Compute basic and diluted EPS for the consolidated entity for 20X2. (Round your answers to 2 decimal places.)
a. basic earning per share
b. Diluted earnings per share
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