Answered: Rahman Company began 2022 with 690,000…

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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1. Rahman Company began 2022 with 690,000 shares of common stock outstanding. On September 1, 2022 there was a 2 for 1 stock split. On November 1, 2022, the company repurchased 270,000 shares of treasury stock. 2. Net Income for 2022 was $18,990,000 and the corporate tax rate is 25%. 3. 4% convertible preferred stock was outstanding all year. Each share has a par value of $100 and the total par value is $18,000,000. Each preferred share is convertible into 3 shares of common stock.

4. In 2015, 8% bonds (maturing in 10 years) were issued at 98. The discount is being amortized on a straight-line basis. The bonds have a $1,000 par value each for a total par value of $12,000,000. Each bond is convertible into 2 shares of common stock.

5. On March 1, 2022, Rahman had a second issuance of convertible bonds at their stated rate of 9%. Each $1,000 bond is convertible into 6 shares of common stock. The total par is $15,000,000.

6. 300,000 Stock options for 300,000 shares of common stock have been were became exerciable in 2021. The options were exercised on 9/30/2022. The option price is $40 and the average market price has been $50.

7. As part of a merger with Lucky Company, Rahman Company agreed to issue 20,000 shares of stock to Lucky’s former shareholders, contingent on Lucky Division achieving $12,000,000 in gross revenues for the year. Gross revenues for the Lucky Division this year were $12,439,000.

Required: Calculate Basic EPS and Diluted EPS for 2022. Make sure to show all work, and explain the process. Put your final answers in the highlighted box.

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Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
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