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reported net income of $1,000,000 for 2014. The tax rate was 40%. As of 1/1/14, 200,000 shares of common stock were outstanding. On 6/1/14 30,000 new shares were sold. There are no potentially dilutive securities outstanding but has 2,000 shares of 8% cumulative preferred stock ($10 par) which was outstanding all year. Calculate the Basic EPS- b. Bonus Issue What is your understanding of a bonus issue and how does it affect the number of shares of a company! Bennett Limited (financial excerpt) 2013 Net profit after interest and tax, but before dividend $100,000 NIL NIL NIL Preference dividend paid for 2013 Preference dividend paid for 2014 Ordinary dividend paid 2014 $200,000 $40,000 $40,000 $20,000 There are 100,000 ordinary shares of nett's fully paid in cash and 50,000 8% cumulative preference shares of nett's ($10) fully paid in cash outstanding as at 1 January 2013. 50,000 ordinary shares of nett's ($10) each were issued on July 1 2013 at full market value fully paid in cash. 75,000 ordinary shares issued as a bonus on 1 July 2014. 25,000 ordinary shares were bought back on 1 October 2014 at full market value. i Determine the weighted average number of shares for both year 2013 and 2014 What is the EPS for year 2013 and 2014

reported net income of $1,000,000 for 2014. The tax rate was 40%. As of 1/1/14, 200,000 shares of common stock were outstanding. On 6/1/14 30,000 new shares were sold. There are no potentially dilutive securities outstanding but has 2,000 shares of 8% cumulative preferred stock ($10 par) which was outstanding all year. Calculate the Basic EPS- b. Bonus Issue What is your understanding of a bonus issue and how does it affect the number of shares of a company! Bennett Limited (financial excerpt) 2013 Net profit after interest and tax, but before dividend $100,000 NIL NIL NIL Preference dividend paid for 2013 Preference dividend paid for 2014 Ordinary dividend paid 2014 $200,000 $40,000 $40,000 $20,000 There are 100,000 ordinary shares of nett's fully paid in cash and 50,000 8% cumulative preference shares of nett's ($10) fully paid in cash outstanding as at 1 January 2013. 50,000 ordinary shares of nett's ($10) each were issued on July 1 2013 at full market value fully paid in cash. 75,000 ordinary shares issued as a bonus on 1 July 2014. 25,000 ordinary shares were bought back on 1 October 2014 at full market value. i Determine the weighted average number of shares for both year 2013 and 2014 What is the EPS for year 2013 and 2014

FINANCIAL ACCOUNTING
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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reported net income of $1,000,000 for 2014. The tax rate was 40%. As of 1/1/14, 200,000 shares of common stock were outstanding. On 6/1/14 30,000 new shares were sold. There are no potentially dilutive securities outstanding but has 2,000 shares of 8% cumulative preferred stock ($10 par) which was outstanding all year. Calculate the Basic EPS. b. Bonus Issue What is your understanding of a bonus issue and how does it affect the number of shares of a company? Bennett Limited (financial excerpt) 2013 Net profit after interest and tax, but before dividend $100,000 Preference dividend paid for 2013 NIL Preference dividend paid for 2014 NIL Ordinary dividend paid NIL 2014 $200,000 $40,000 $40,000 $20,000 There are 100,000 ordinary shares of nett's fully paid in cash and 50,000 8% cumulative preference shares of nett's ($10) fully paid in cash outstanding as at 1 January 2013. 50,000 ordinary shares of nett's ($10) each were issued on July 1 2013 at full market value fully paid in cash. 75,000 ordinary shares issued as a bonus on 1 July 2014. 25,000 ordinary shares were bought back on 1 October 2014 at full market value. i. Determine the weighted average number of shares for both year 2013 and 2014 What is the EPS for year 2013 and 2014
Transcribed Image Text:reported net income of $1,000,000 for 2014. The tax rate was 40%. As of 1/1/14, 200,000 shares of common stock were outstanding. On 6/1/14 30,000 new shares were sold. There are no potentially dilutive securities outstanding but has 2,000 shares of 8% cumulative preferred stock ($10 par) which was outstanding all year. Calculate the Basic EPS. b. Bonus Issue What is your understanding of a bonus issue and how does it affect the number of shares of a company? Bennett Limited (financial excerpt) 2013 Net profit after interest and tax, but before dividend $100,000 Preference dividend paid for 2013 NIL Preference dividend paid for 2014 NIL Ordinary dividend paid NIL 2014 $200,000 $40,000 $40,000 $20,000 There are 100,000 ordinary shares of nett's fully paid in cash and 50,000 8% cumulative preference shares of nett's ($10) fully paid in cash outstanding as at 1 January 2013. 50,000 ordinary shares of nett's ($10) each were issued on July 1 2013 at full market value fully paid in cash. 75,000 ordinary shares issued as a bonus on 1 July 2014. 25,000 ordinary shares were bought back on 1 October 2014 at full market value. i. Determine the weighted average number of shares for both year 2013 and 2014 What is the EPS for year 2013 and 2014
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