Question

restbank Multiple Choice Question 119 Coronado Industries, has 4130000 shares of common stock outstanding on December 31 on stock outstanding on December 31, 2020. An additional 798000 shares of common stock were issued on April 1 2021, and 406000 more on July 1, 2021. On October 1, 2021, Coronado issued 19600, $1,000 face value, 8% convertible bonds. Each bond is convertible into 20 sha . No bonds were converted into common stock in 2021. What is the number of shares to be used in computing basic earning earnings per share, respectively? O 5329500 and 6129500 O 4931500 and 5329500 O 4931500 and 4931500 O 4931500 and 5029500 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Question -119

Correct answer is 4931500 and 5029500

Calculation :-

Shares used for Basic earning per share

Date	Outstanding shares/New shares	Weigtage in months	Outstanding shares* weightage
01/01/21	4130000	12	49,560,000
01/04/21	798000	9	7,182,000
01/07/21	406000	6	2,436,000
	Total		59,178,000
	No of shares to be used for basic earning per share		4,931,500	(59178000/12)

Calculation of shares for Diluted EPS

Total bonds issued on 01-10-2021 - 19,600

Convertable @ 20 shares per bond, so total shares is = 392000(19600*20)

Only 3 months weightage is applicable as issued on 01-10-2021

So additional shares to be considered for Diluted EPS = 98,000 (392000/12*3)

Shares to be used for Basic EPS (As above) -4931500

So total shares to be considered for calculation of Diluted EPS = 5029500(4931500+98000)

Question No- 94

Answer is

$1,008,000

Note:- we need to use the Equity method as the cullumber company has significant influence over Tylor inc (based on the number of share holding -70%)

Under the equity method we need to consider only the Total Income generated for the calculation of investment revenue which is $1440000. As the 70% is the holding by Cullumber the investment revenue is 1440000*.70= $1,008,000