Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies’ balance sheets as of December 31, 20X4, were as follows: Punch Manufacturing Corporation Short Retail Stores Assets Cash $ 58,000 $ 38,000 Accounts Receivable 110,000 90,000 Inventory 250,000 125,000 Land 105,000 75,000 Buildings and Equipment 510,000 310,000 Less: Accumulated Depreciation (230,000) (140,000) Investment in Short Retail Stores 140,000 Total Assets $ 943,000 $ 498,000 Liabilities and Equity Accounts Payable $ 113,000 $ 33,000 Bonds Payable 270,000 200,000 Preferred Stock ($10 par value) 200,000 90,000 Common Stock: $10 par value 150,000 $5 par value 100,000 Retained Earnings 210,000 75,000 Total Liabilities and Equity $ 943,000 $ 498,000 Short Retail’s 8 percent preferred stock is convertible into 15,000 shares of common stock, and its 10 percent bonds are convertible into 8,000 shares of common stock. Short reported net income of $52,800 for 20X4 and paid dividends of $30,900. Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reported after-tax income, excluding investment income from Short, of $100,000 in 20X4 and paid dividends of $69,000. The companies file separate tax returns and are subject to a 40 percent income tax. Compute basic and diluted EPS for the consolidated entity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies’ balance sheets as of December 31, 20X4, were as follows:

	Punch Manufacturing Corporation	Short Retail Stores
Assets
Cash	$ 58,000	$ 38,000
Accounts Receivable	110,000	90,000
Inventory	250,000	125,000
Land	105,000	75,000
Buildings and Equipment	510,000	310,000
Less: Accumulated Depreciation	(230,000)	(140,000)
Investment in Short Retail Stores	140,000
Total Assets	$ 943,000	$ 498,000
Liabilities and Equity
Accounts Payable	$ 113,000	$ 33,000
Bonds Payable	270,000	200,000
Preferred Stock ($10 par value)	200,000	90,000
Common Stock:
$10 par value	150,000
$5 par value		100,000
Retained Earnings	210,000	75,000
Total Liabilities and Equity	$ 943,000	$ 498,000

Short Retail’s 8 percent preferred stock is convertible into 15,000 shares of common stock, and its 10 percent bonds are convertible into 8,000 shares of common stock. Short reported net income of $52,800 for 20X4 and paid dividends of $30,900.

Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reported after-tax income, excluding investment income from Short, of $100,000 in 20X4 and paid dividends of $69,000. The companies file separate tax returns and are subject to a 40 percent income tax.

Compute basic and diluted EPS for the consolidated entity.

AI-Generated Solution

AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.