Question

--/1 Question 6 View Policies Current Attempt in Progress Amy Dyken, controller at Grouper Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Grouper's financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Grouper Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 10% 8% convertible bonds payable 10% bonds payable Total long-term debt $1,000,000 5,080,000 5,940,000 $12,020,000 Shareholders' equity Preferred stock, 6% cumulative, $50 par value, 106,000 shares authorized, 26,500 shares issued and outstanding Common stock, $1 par, 9,900,000 shares authorized, 990,000 shares issued and outstanding Additional paid-in capital Retained earnings Total shareholders' equity $1,325,000 990,000 3,920,000 5,900,000 $12,135,000 The following transactions have also occurred at Grouper. 1. Options were granted on July 1, 2019, to purchase 220,000 shares at $15 per share. Although no options were exercised during fiscal year 2020, the average price per common share during fiscal year 2020 was $20 per share. 2. Each bond was issued at face value. The 8% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2019. 3. The preferred stock was issued in 2019. 4. There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2020. 5. The 990,000 shares of common stock were outstanding for the entire 2020 fiscal year. 6. Net income for fiscal year 2020 was $1,520,000, and the average income tax rate is 20%. For the fiscal year ended June 30, 2020, calculate the following for Grouper Pharmaceutical Industries. (Round answers to 2 decimal places, eg. $2.45.) (a) Basic earnings per share. Basic earnings per share $ (b) Diluted earnings per share. Diluted earnings per share $

Answer 1

Page - No 9 Anacoren. @ Basic coringa po na share Nebe income = $ 15.20,000 Preferred dividend = $50 pan value x(67.X26500) = 50 x 1590 = $79500 - Weighted average number of common shares outstanding = 990,000 Basic casinings per share. Net income - Preberred dividend Creighted average no.of common shares - 1520,000 - 79500 990,000 o = $10 46 per share .: Basic earnings por share = $1.46 per share Deluded carnings porn stare Net income available for cquity share holders = 1536,000 - 79500 = $1440500

Page No ③ Interest on convertide bonds nels off tax = (-20%) x 8 % X5080,000 = 0.8 %0.08 X 5080/000 $325120 areighted average noiof cquity shanes = 990,000 Norge equila shares converted by convertible shares = $5080.000 $1000 = 254000 shares -X220000 Because of options, increase in sharies $20 share - $15 ]dhane #20 / share X 220,000 3 20 = 55000 Diluted net income available for equity chancholder + interes on EPS = Convertible bonds net off taxe weighted aug no of equilay shares t No.of equily shares convented by convertible shares to increase in shares

- Page No ③ 1440500 + 305120 990,000 + 254000 + 55000 1765620 1299000 = $ 1136 per share : . Diluted carinings por sharic - $1136 per share