a. Computation of Earning per share |
Computation of Earning Available for Common Stockholder | |
Net Income | $1,190,000 |
Less: Preferred Dividend (40,00,000 x 6%) | ($240,000) |
Earning available for common shareholders | $950,000 |
Number of shares outstanding ( 6280000/$10) | 628000 |
Earning per Share= Earning available for Common Shareholder/ No. of shares outstanding |
EPS =$950000/628000 shares= $1.51 per Share |
b. Computation diluted Earning per share | |
Computation of Adjusted Net Income | |
Net Income | $1,190,000 |
Less: Preferred Dividend (40,00,000 x 6%) | ($240,000) |
Interest savings (net of tax) (1970,000 x 7% x (1-40%)) | ($82,740) |
Adjusted Net Income | $867,260 |
Computation ofAdjusted Outstanding shares | |
Average common shares | 628,000 |
Number of shares under warrant ($25 -$20)/$25 ) x 68,800 shares | 13,760 |
Number of Common shares to be issued in lieu of conversion of bonds ($1970,000 /$1,000) X 30 shares/bond | 59,100 |
Total Shares Outstanding | 700,860 |
Diluted EPS= Adjuested Net Income/ Adjusted Outstnading Shares |
=867260/700860=$1.24per share |
Problem 16-8 The information below pertains to Sheridan Company for 2018 Net income for the year $1,190,000 7% converti...
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The information below pertains to Barkley Company for 2021. Net income for the year $1,200,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 2,000,000 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 4,000,000 Common stock, $10 par value 6,000,000 Tax rate for 2021 20% Average market price of common stock $25 per share There were no changes during 2021...
Problem 16-08 The information below pertains to Novak Company for 2021. Net income for the year $1,220,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 1,990,000 6% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 3,990,000 Common stock, $10 par value 6,140,000 Tax rate for 2021 20% Average market price of common stock $25 per share There were no...
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