Question

Amy Dyken, controller at Sunland Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Sunland's financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Sunland Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 10% 9% convertible bonds payable 10% bonds payable Total long-term debt $990,000 5,040,000 6,080,000 $12,110,000 Shareholders' equity Preferred stock, 5% cumulative, $50 par value, 104,000 shares authorized, 26,000 shares issued and outstanding Common stock, $1 par, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding Additional paid-in capital Retained earnings Total shareholders' equity $1,300,000 1,000,000 3,990,000 6,090,000 $12,380,000

Answer 1

Ans:

a. Basic Earning Per share Basic Earning Per share Net Income - 1,490,000 - 1,490,000 - Choose Numerator Preferred Dividend (26000*50*0.05) 65000 Choose Denominator Weighted Average Shares = 1,000,000 = 1,000,000 = 1.43 Less: Add: Net Income Preferred Dividend(26000*50*0.05) Interest (net of tax) (5040000*0.09*0.8) 1,490,000 65000 362880 {1} 1,787,880.00 1,000,000 Outstanding Shares Convertiable Bonds Payable(5040000*50*/1000) Incremental shares Options 180000* (20-15)/20 252000 45000 Average Shares {2} 1,297,000 Diluted Earning Per Share (1/2) 1787880/1297000 1.38