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Question # 4 Basic and diluted earnings per share Throughout the calendar year 2020, Kali Corporation...

Question # 4

Basic and diluted earnings per share

Throughout the calendar year 2020, Kali Corporation has 400,000 common shares outstanding (no preferred shares issued). In addition, Collie has 5,000, 20-year, 7% bonds outstanding, issued at par in 2018. Each $ 1,000 bond is convertible into 20 common shares after June 30, 2021. Collie reported net income of $ 600,000 for calendar 2020. Their income tax rate is 30%.

Instructions

Calculate basic and diluted earnings per share for 2020.

Question # 5

On January 1, 2019, Hulk Ltd. reported the following balances relating to their defined benefit pension plan:

...... Defined benefit obligation............................................... $1,600,000

...... Fair value of plan assets...............................................    1,600,000

Other data related to the pension plan for calendar 2019 are:

...... Current service cost.....................................................         80,000

...... Contributions to the plan................................................       120,000

...... Benefits paid..................................................................       100,000

...... Actual return on plan assets.........................................         96,000

...... Interest (discount) rate..................................................            10%

Instructions

a.    Calculate pension expense for 2019.

b.    Prepare the journal entries to record the pension expense and the contributions for 2019.

Business   Accounting   
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Homework Answers

Answer #1

Anser for Q.14

1 Basic Earning Per Share = Net Income/ Total Outstanding No of share

= $600000/400000 Shares

=$1.5 Per Share

2. (a) working For Diluted Earning Per Share

Earning After Tax =$600000

(+) Saving in Interest (1000*100=100000*7%) = $7000

(-) Tax on Saving On Interst ($7000*30%) =$2100

Revised Earnig For Share Holder =$604900

(b) Calculation Of No. Of share

Opening Share (Given) =400000 Shares

+Convertible Bond 1000*20Share = 20000 Shares

Total No. of Share =60000 Shares

3. Diluted Earning per Share = $604900/420000Shares

=$1.44 Per Shares

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