Steven Limited's net income for the year ended December 31, 2023 was $650,250 and there were 92,000 common sharesoutstanding during the entire year. Steven has the following two convertible securities outstanding:10% convertible bonds (each $1,000 bond is convertible into 20 common shares)$200,0005% convertible $100 par value cumulative preferred shares (each share is convertible into two common shares) $125,000Both convertible securities were issued at face value in 2020. There were no conversions during 2023, and Steven's income tax rate is25%.(a)(b)X Your answer is incorrect.Calculate basic earnings per share. (For simplicity, ignore the requirement to record the debt and equity portions of theconvertible bond separately). (Round answer to 2 decimal places, e.g. 15.25.)Basic earnings per share $7.07

The objective of the question is to calculate the basic earnings per share (EPS) for Steven Limited…

Answered: Steven Limited's net income for the…

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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James Company had bonds which are convertible into shares of common stock. There were two bonds, both issued at par. One was for $400,000 and was purchased on January 1st with an interest rate of 6%, this bond is convertible into 200,000 shares of common stock. The second bond was for $600,000 and had an interest rate of 8% and was purchased on May 1st, this bond is convertible into 400,000 shares of common stock. Interest on both bonds is paid annually. The overall tax rate for the organization is 20%. Additionally, net income is $800,000, but does not include interest expense or taxes. The organization currently has 460,000 shares of common stock outstanding. A. Calculate Earnings Per Share B. Calculate Dilutive Earnings Per Share using the if converted method. C. Is the organization anti-dilutive? Explain your answer.
Information from the financial statements of Ames Fabricators, Inc., included the following: December 31 Common shares Convertible preferred shares (convertible into 68,000 shares of common) 83 convertible bonds (convertible into 30,000 shares of common) Basic Diluted Numerator Ames's net income for the year ended December 31, 2021, is $740,000. The income tax rate is 25%. Ames paid dividends of $5 per share on its preferred stock during 2021. 1 2021 100,000 26,400 $1,000,000 Required: Compute basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in thousands (For example, 100,000 should be entered as 100). Do not round intermediate calculations.) Denominator 2020 100,000 26,400 Earnings per Share $1,000,000
The information below pertains to Windsor Company for 2026. Net income for the year 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock Common stock, $10 par value Tax rate for 2026 Average market price of common stock 4 a. Compute basic earnings per share for 2026. (Round answer to 2 decimal places, e.g. 2.55.) Basic earnings per share $ b. Compute diluted earnings per share for 2026. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share There were no changes during 2026 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 71,800 shares of common stock at $20 per share. eTextbook and Media 1.65 $ $1,210,00 1,970,00 4,200,00 5,820,00 20% $25 per shar ▶
Information from the financial statemets of Henderson-Niles Industries included the following at December 31, 2021: 12 Comnon shares outstanding throughout the year Convertible preferred shares (convertible into 32 million shares of common) Convertible 8% bonds (convertible into 13.5 million shares of common) 100 million 60 million $900 million Henderson-Niles's net income for the year ended December 31, 2021, is $520 million. The income tax rate is 25%. Henderson-Niles paid dividends of $2 per share on its preferred stock during 2021. 01:54:48 Required: Compute basic and diluted earnings per share for the year ended December 31, 2021. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answers to 2 decimal places.) Numerator Denominator Earnings per share Basic Diluted I ||| |
Crane Co. had 190000 shares of common stock, 20700 shares of convertible preferred stock, and $1540000 of 4% convertible bonds outstanding during 2025. The preferred stock is convertible into 40400 shares of common stock. During 2025, Crane paid dividends of $1.00 per share on the common stock and $3 per share on the preferred stock. Each $1000 bond is convertible into 30 shares of common stock. Crane's net income for 2025 was $605000 and its income tax rate was 35%. Diluted earnings per share for 2025 was O $2.33. # O $2.19. O $2.15. O $2.63.
On January 1, 2025, Swifty Company issued 10-year, $1,860,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Swifty common stock. Swifty's net income in 2025 was $412,800, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ 3.99 b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Swifty common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share
On January 1, 2025, Nash Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Nash common stock. Nash's net income in 2025 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Nash common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share
Pharoah Corporation has net income for the year of $423,780 and a weighted average number of common shares outstanding during the period of 100,900 shares. The company has two convertible debenture bond issues outstanding. One is a 6% issue sold at 100 (total $1 million) in a prior year and convertible into 20,100 common shares. The other is a 10% issue sold at 100 (total $500,000) on April 1 of the current year and convertible into 35,700 common shares. The tax rate is 30%. Calculate basic earnings per share and diluted earnings per share and show how they would be presented in the financial statements. (Round earnings per share answers to 2 decimal places, eg 15.25) Net income for the year Earnings per share: Basic earnings per share Diluted earnings per share eTextbook and Media List of Accounts $ $ 423700 Save for Later Last saved 1 second ago Saved work will be auto-submitted on the due date. Auto- submission can take up to 10 minutes. Attempts: unlimited Submit Anwwer P
Novak Inc. had net income for the current year ending December 31, 2023 of $953,780. During the entire year, there were 502,000 common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.09 cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 103,000 $6.09 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Novak had outstanding a $1,000,000, 6% bond issued at par in 2012 that was convertible to 21,000 common shares. The company also had outstanding a $1,000,000, 4% bond issued at par in 2013 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Novak's tax rate is 37%. Determine an incremental per share effect for the 2012 bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.) Potentially dilutive security 2012 Bonds Incremental Numerator Effect $ Incremental…
The information below pertains to Shamrock Company for 2021. Net income for the year $1,210,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 2,000,000 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 4,080,000 Common stock, $10 par value 6,130,000 Tax rate for 2021 20% Average market price of common stock $25 per share There were no changes during 2021 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 74,200 shares of common stock at $20 per share. (a) Compute basic earnings per share for 2021. Basic earnings per share $ (b) Compute diluted earnings per share for 2021. Diluted earnings per share $
7. At December 31, 2024, DEF Corporation had outstanding 200,000 shares of common stock. Also outstanding were 80,000 shares of preferred stock convertible into 64,000 common shares and $2,000,000 of 10% bonds convertible into 30,000 common shares. DEF's net income for the year ended December 31, 2024, is $1,140,000. The income tax rate is 25%. DEF paid dividends of $3 per share on its preferred stack during 2024. Required: Compute basic and diluted earnings per share for the year ended December 31, 2024, considering possible antidilutive effects.
The following information was taken from the books and records of Cullumber, Inc.: 1. Net Income $391,400 2. Capital structure: a. Convertible 6% bonds. Each of the 290, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 290,000 b. $10 par common stock, 190,000 shares issued and outstanding during the entire year. 1,900,000 c. Stock warrants outstanding to buy 15,040 shares of common stock at $20 per share. 3. Other information: a. Bonds converted during the year None b. Income tax rate 30% c. Convertible debt was outstanding the entire year d. Average market price per share of common stock during the year $32 e. Warrants were outstanding the entire year f. Warrants exercised during the year Compute diluted earnings per share

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