Raimer Corp. has 400,000 shares of $20 par value common stockoutstanding throughout 20x2. In addition, the corporation has500, $1,000, 5% bonds outstanding that were issued at par in20x0. Each $1,000 bond is convertible into thirty 30) shares ofcommon stock. During 20x2, the corporation earned $600,000of net income. The tax rate was 30%.Assume that the bonds were issued at a premium, instead ofbeing issued at par. Assume that 100 of the bonds wereconverted to common stock in 20x3. On the conversion date, thebonds had a book value of $103,000.Record the conversion. SHOW YOUR CALCULATIONS.

Bonds are debt securities or fixed-income instruments that represent a loan made by an investor to…

Answered: Raimer Corp. has 400,000 shares of $20…

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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Firm LM's debt-to-total-assets ratio (D/TA) is 25 percent, whereas Firm QR's D/TA ratio is 50 percent. LM has $800,000 in assets, $60,000 EBIT, and 15,000 shares of stock outstanding, and it pays 8 percent interest. QR has $400,000 in assets, $70,000 EBIT, and 25,000 shares of stock outstading, and it pays 10 percent interest. The marginal tax rate for both firms is 40 percent. Calculate each firm's EPS and ROE (ROE = Net income/Equity). Discuss your results.
Ahnberg Corporation had 800,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1 Ahnberg issued 100,000 shares of convertible preferred stock. The preferred shares are convertible into 200,000 shares of common stock. During the year Ahnberg paid $60,000 cash dividends on the preferred stock. Net income was $1,500,000. What were Ahnberg’s basic and diluted earnings per share for the year?
Oriole Corporation earned $474,360 during a period when it had an average of 118,000 common shares outstanding. The common shares sold at an average market price of $25 per share during the period. Also outstanding were 17,400 warrants that could each be exercised to purchase one common share for $10.
Aggregate Mining Corporation was incorporated five years ago. It is authorized to issue 500,000 shares of $100 par value 10% preferred stock. It is also authorized to issue 750,000 shares of $1 par value common stock. It has issued only 40,000 of the common shares and none of the preferred shares. In its sixth year, the corporation has the following transactions: Mar. 1 Declares a cash dividend of $2 per share. Mar. 30 Pays the cash dividend. Jul. 10 Declares a 5% stock dividend when the stock is trading at $20 per share. Aug. 5 Issues the stock dividend. Prepare the journal entries to record the transactions. If an amount box does not require an entry, leave it blank. Mar. 1 fill in the blank 2 fill in the blank 3 fill in the blank 5 fill in the blank 6 Mar. 30 fill in the blank 8 fill in the blank 9 fill in the blank 11 fill in the blank 12 Jul. 10 fill in the blank 14 fill in the blank 15 fill in the blank 17 fill in the blank 18…
Kahlua Company had 100,000 shares of common stock outstanding on January 1st. On September 30th, Kahlua sold 48,000 shares of common stock for cash. Kahlua had 10,000 shares of convertible preferred stock outstanding throughout the year. Each preferred stock is $100 par, 6%, and is convertible into 3 shares of common stock. Kahlua also had 500, 8%, convertible bonds outstanding throughout the year. Each $1,000 bond is convertible into 30 shares of common stock. The bonds were issued at par. Net income for the year was $300,000 and the tax rate is 40%. The preferred dividends were paid during the year.Basic earnings per share reported by Kahlua Company for the year is closest to:-$2.14-$2.68-$2.06-$2.36 Diluted earnings per share reported by Kahlua Company for the year is closest to:-$2.14-$2.68-$2.06-$2.36
Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $2,500,000 Preferred $1 stock, $10 par 2,500,000 Common stock, $25 par 2,500,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $1,050,000, (b) $1,300,000, and (c) $1,550,000.
Enscoe Enterprises, Incorporated (EEI) has 280,000 shares authorized, 250,000 shares issued, and 20,000 shares of treasury stock. At this point, EEI has $2,120,000 of assets. $280,000 liabilities, $540,000 of common stock, and $1,300,000 of retained earnings. Further, assume that the market value of EEI's common stock is $10 per share. Required
During the current year, High Corporation had 3 million shares of common stock outstanding. $5,000,000 of 6% convertible bonds were issued at face amount at the beginning of the year. High reported income before tax of $4 million and net income of $3 million for the year. The bonds are convertible into 625,000 shares of common. What is diluted EPS (rounded)? A. $0.89. B. $0.91. C. $1.00. D. $1.08
c. A company has $20,912,543 of net income during the year and 934,887 common shares outstanding, 96,508 of which are treasury shares, and 2,000,000 authorized shares. Assume the company has 1,000 convertible bonds with a total face value of $1,000,000 since the beginning of the year. The bonds were issued at par with a 5% coupon rate and each bond converts to 2 shares of stock. The company has an effective tax rate of 21%. Compute diluted EPS. Enter your answer in dollars rounded to 2 decimal places with no $ or commas
Jennifer Corporation has issued 300,000 shares of $3 par value common stock. It authorized 600,000 shares. The paid-in capital in excess of par on the common stock is $380,000. The corporation has reacquired 15,000 shares at a cost of $50,000 and is currently holding those shares. Treasury stock was reissued in prior years for $72,000 more than its cost. The corporation also has 4,000 shares issued and outstanding of 8%, $100 parvalue preferred stock. It authorized 10,000 shares. The paid-in capital in excess of par on the preferred stock is $25,000. Retained earnings is $610,000. Prepare the stockholders' equity section of the balance sheet.
A corporation began be issuing 1 million share of $1 common stock. The proceeds from this common stock issuance was $10,000,000. The corporation issued a first-mortgage bond for $25,000,000. It was issued at par value, the coupon interest rate is 5% and the life is 10 years. The corporation established a line of credit with a commercial bank and immediately borrowed $2,000,000 from this line of credit. This amount is to be repaid in 6 months. Construct a partial classified balance sheet in good form based on the transactions above.
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