Question

value 10.00 points On December 31, 2010, DW Steel Corporation had 600,000 shares of ordinary shares and 300,000 shares of 8%, noncumulative, nonconvertible preference shares issued and outstanding DW issued a 4% bonus issue on ordinary shares on May 15 and paid cash dividends of $400,000 and $75,000 to ordinary and preference shareholders, respectively, on December 15, 2011 On February 28, 2011, DW issued 60,000 ordinary shares. Also, as a part of a 2010 agreement for the acquisition of Merrill Cable Company, another 23,000 shares (already adjusted for the bonus issue) are to be issued to former Merrill shareholders on December 31, 2012, if Merrill's 2012 net income is at least $500,000. In 2011, Merrill's net income was $630,000 in keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. DWs net income for the year ended December 31, 2011, was $2,100,000 The income tax rate is 20% As part of an incentive compensation plan, DW granted incentive share options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of ordinary shares at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and ordinary shares prices follows Date Granted Options Granted (adjusted for the bonus issue) Share Price December 31, 2009 December 31, 2010 December 31, 2011 8,000 3,000 6,500 S 24 S 33 $ 32 The market price of the ordinary shares averaged $32 per share during 2011 On July 12, 2009, DW issued $800,000 of convertible bonds. Each $1,000 bond is convertible into 30 ordinary shares (adjusted for the bonus issue) On January 1, 2011, the unamortized balance of the debt component was S761 ,570 The effective interest rate was 12% Required: Compute DWs basic and diluted earnings per share for the year ended December 31, 2011 ( answers to 2 decimal places. Omit the $" sign in your response.) DW's basic earnings per share DW's diluted earnings per share References Worksheet Learning Objective: 19-06 Differentiate the effect on EPS of the issue of new shares, a bonus issue or share split, and the reacquisition of Learning of EPS shares. Learning Objective: 19-04 Learming Objective: 19-07 Describe how preference dividends affect the calculation of Distinguish between a simple and a eomnlay canital etricture 。在这里输入你要搜索的内容 0 enov

Answer 1

(Basic EPS) Net Income Less: Preferred dividends 1 21,00,000 75,000 20,25,000 2 4 Weighted average shares of common stock outstanding 6 71/1- 12/31 600,000 x (12/12) 8 2/28 - 12/31 60,000 x (10/12) 97/1 - 12/31 (2000)*6/12 10 600,000*1.04| 50,000% 1 .04 624000 52000 1000 675000 Weighted average shares 12 (Basic EPS) 2025000/675000 13 14 Diluted EPS l(S2,100,000 - $75,000)/(675,000 + 2,000) 2.99