Amy Dyken, controller at Waterway Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Waterway’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020.
Waterway Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020
Long-term debt Notes payable, 10% $1,020,000
8% convertible bonds payable 5,080,000
10% bonds payable 6,110,000
Total long-term debt $12,210,000
Shareholders’ equity Preferred stock, 6% cumulative, $50 par value, 98,000 shares authorized, 24,500 shares issued and outstanding $1,225,000
Common stock, $1 par, 10,200,000 shares authorized, 1,020,000 shares issued and outstanding 1,020,000
Additional paid-in capital 3,990,000
Retained earnings 5,900,000
Total shareholders’ equity $12,135,000
The following transactions have also occurred at Waterway.
1. Options were granted on July 1, 2019, to purchase 200,000 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 1,020,000 shares of common stock were outstanding for the entire 2020 fiscal year.
6. Net income for fiscal year 2020 was $1,530,000, and the average income tax rate is 20%.
For the fiscal year ended June 30, 2020, calculate the following for Waterway Pharmaceutical Industries. (Round answers to 2 decimal places, e.g. $2.45.)
(a) Basic earnings per share. Basic earnings per share $
(b) Diluted earnings per share. Diluted earnings per share $
Solution:
a. Basic earnings per share = (Net income - Preferred dividend ) / Weighted avg. no. of shares of common stock outstanding
= ($1,530,000 - $0) / 1,020,000
= $1.50 (rounded off)
b. Diluted earnings per share = (Net income + After tax interest on convertible bonds) / ( Weighted avg. no. of shares outstanding + No. of diluted shares)
= [$1,530,000 + $5,080,000×8%×(1-0.20) ] / [1,020,000 + 200,000×$15/$20 + $5,080,000×50/$1,000 ]
= ($1,530,000 + $325,120) / [1,020,000 + 150,000 + 254,000]
= $1,855,120 / 1,424,000
= $1.30 (Rounded off)
Amy Dyken, controller at Waterway Pharmaceutical Industries, a public company, is currently preparing the calculation for...
Amy Dyken, controller at Blossom Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Blossom’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Blossom Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 10% $1,020,000 8% convertible bonds payable 5,080,000 10% bonds payable 6,110,000 Total long-term debt $12,210,000 Shareholders’ equity Preferred stock, 6% cumulative, $50 par...
Amy Dyken, controller at Wildhorse Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Wildhorse’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Wildhorse Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 11% $1,020,000 9% convertible bonds payable 5,020,000 11% bonds payable 6,120,000 Total long-term debt $12,160,000 Shareholders’ equity Preferred stock, 5% cumulative, $50 par...
Amy Dyken, controller at Wildhorse Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Wildhorse’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Wildhorse Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 10% $1,020,000 9% convertible bonds payable 4,970,000 10% bonds payable 5,980,000 Total long-term debt $11,970,000 Shareholders’ equity Preferred stock, 5% cumulative, $50 par...
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...
Amy Dyken, controller at Bridgeport Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Bridgeport’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Bridgeport Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 10% $990,000 9% convertible bonds payable 5,040,000 10% bonds payable 6,080,000 Total long-term debt $12,110,000 Shareholders’ equity Preferred stock, 5% cumulative, $50 par...
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...
Amy Dyken, controller at Pina Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Pina’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2017. PINA PHARMACEUTICAL INDUSTRIES SELECTED BALANCE SHEET INFORMATION JUNE 30, 2017 Long-term debt Notes payable, 10% $1,020,000 9% convertible bonds payable 5,030,000 10% bonds payable 5,950,000 Total long-term debt $12,000,000 Shareholders’ equity Preferred stock, 5% cumulative, $50 par...
Amy Dyken, controller at Sandhill Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Sandhill’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Sandhill Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 10% $1,010,000 9% convertible bonds payable 5,030,000 10% bonds payable 5,990,000 Total long-term debt $12,030,000 Shareholders’ equity Preferred stock, 6% cumulative, $50 par...
Amy Dyken controller at Sheridan Pharmaceutical Industries, a public company is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Sheridan financial statements Below is selected financial information for the fiscal year ended June 30, 2020. Sheridan Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term diebt Notes payable, 10% 9X convertible bonds payable 10% bonds payable Total long-term debt $1.000.000 5,050,000 5.920,000 $11.970,000 Shareholders' equity Preferred stock, 5% cumulative, $50 par...
Problem 16-05 Amy Dyken, controller at Monty Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Monty's financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Monty Pharmaceutical Industries Selected Balance Sheet Information June 30, 2020 Long-term debt Notes payable, 11% 8% convertible bonds payable 11% bonds payable Total long-term debt $980,000 5,030,000 6,100,000 $12,110,000 Shareholders' equity Preferred stock, 6% cumulative,...