Homework Answers
Calculation of Diluted earnings per share
Net income - $ 112,00,000
Add : Interest on bond (net of tax) i.e (1 - 20%)
Or (1 - .20)
5060000*7%=354200 *(1-.20) $ 2,83,360
Adjusted net income 1,14,83,360
Total outstanding shares = Current outstanding share + Convertible debenture
1815000 + (5060*14) = 1885840 shares
Diluted earning per share = Adjusted net income / outstanding share
11483360 / 1885840
= 6.08
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Exercise 16-24 The Headland Corporation issued 10-year, $4,100,000 par, 7% callable convertible subordinated debentures on January...
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The bonds have a par value of $1,000, with interest payable
annually. The current conversion ratio is 13:1, and in 2 years it
will increase to 19:1. At the date of issue, the bonds were sold at
96. Bond discount is amortized on a straight-line basis. Skysong’s
effective tax was 35%. Net income in 2017 was $8,800,000, and the
company had 1,985,000 shares outstanding...
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Problem 16-08 Your answer is partially correct. Try again. The information below pertains to Wildhorse Company...
Problem 16-08
Your answer is partially correct. Try again.
The information below pertains to Wildhorse Company for 2021.
Net income for the year
$1,250,000
7% convertible bonds issued at par ($1,000 per bond); each bond
is convertible into
30 shares of common stock
2,070,000
6% convertible, cumulative preferred stock, $100 par value;
each share is convertible
into 3 shares of common stock
4,120,000
Common stock, $10 par value
6,060,000
Tax rate for 2021
20%
Average market price of common...
Exercise 16-25 x Your answer is incorrect. Try again. On January 1, 2017, Metlock Company issued...
Exercise 16-25 x Your answer is incorrect. Try again. On January 1, 2017, Metlock Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 14 shares of Metlock common stock. Metlock's net income in 2017 was $294,000, and its tax rate was 40%. The company had 110,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2...
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The Skysong Corporation issued 10-year, $5,270,000 par, 6%
callable convertible subordinated debentures on January 2, 2017.
The bonds have a par value of $1,000, with interest payable
annually. The current conversion ratio is 13:1, and in 2 years it
will increase to 19:1. At the date of issue, the bonds were sold at
96. Bond discount is amortized on a straight-line basis. Skysong’s
effective tax was 35%. Net income in 2017 was $8,800,000, and the
company had 1,985,000 shares outstanding...
Exercise 16-24 The Bridgeport Corporation issued 10 year $5,460.000 par a convertible subordinated debentures on January 2, 2017. The bonds have a value of $1.000 hinterest payable annually. The current conversion ratio is 14:1, and in 2 years w increase to 16:1. At the date of the bonds were sold and discount is more on asrah line basis. Bridgeport's effective tax was 35%. Net income in 2017 was 18.000.000, and the company had 2,185,000 shares outstanding during the entire year...
Problem 16-08
Your answer is partially correct. Try again.
The information below pertains to Wildhorse Company for 2021.
Net income for the year
$1,250,000
7% convertible bonds issued at par ($1,000 per bond); each bond
is convertible into
30 shares of common stock
2,070,000
6% convertible, cumulative preferred stock, $100 par value;
each share is convertible
into 3 shares of common stock
4,120,000
Common stock, $10 par value
6,060,000
Tax rate for 2021
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Average market price of common...
Exercise 16-25 x Your answer is incorrect. Try again. On January 1, 2017, Metlock Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 14 shares of Metlock common stock. Metlock's net income in 2017 was $294,000, and its tax rate was 40%. The company had 110,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2...
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