Question

Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000...

Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 6% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 40 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%.

4.         Basic earnings per share for 2015 is (rounded to the nearest penny)

a.   $1.57.

b.   $1.71.

c.   $1.80.

d.   $1.85.

5.         Diluted earnings per share for 2015 is (rounded to the nearest penny)

a.   $1.41.

b.   $1.49.

c.   $1.53.

d.   $1.58.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Computation of Basic EPS and Diluted EPS
BASIC EPS DILUTED EPS
NET INCOME 400,000 400,000
LESS: Preference Dividend 1.5* 20,000 = 30,000
ADD: After Tax Cost of Debt 1,000,000*6%*(1-30%) = 42,000
Earrings Available (A) 370,000 442,000
Weighted Common Stock 200,000 200,000
Weighted Additional stock if preference shares are converted 40,000
Weighted additional stock if debt is converted 1,000,000/1000 *40 = 40,000
Total Weighted shares (B) 200,000 280,000
EPS (A/B) 1.85 1.58

So,

4. D is correct.

5. D is correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sunland Company had 204000 shares of common stock, 21000 shares of convertible preferred stock, and $592000...
Sunland Company had 204000 shares of common stock, 21000 shares of convertible preferred stock, and $592000 of 11% convertible bonds outstanding during 2021. The preferred stock is convertible into 40400 shares of common stock. During 2021, Sunland paid dividends of $0.54 per share on the common stock and $1.80 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2021 was $357000 and the income tax rate was 25%....
Sheridan Company had 206000 shares of common stock, 20000 shares of convertible preferred stock, and $598000...
Sheridan Company had 206000 shares of common stock, 20000 shares of convertible preferred stock, and $598000 of 12% convertible bonds outstanding during 2021. The preferred stock is convertible into 39000 shares of common stock. During 2021, Sheridan paid dividends of $0.56 per share on the common stock and $1.80 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2021 was $366000 and the income tax rate was 25%....
Hutchins Company had​ 200,000 shares of common​ stock, 50,000 shares of convertible preferred​ stock, and​ $2,000,000...
Hutchins Company had​ 200,000 shares of common​ stock, 50,000 shares of convertible preferred​ stock, and​ $2,000,000 of​ 10% convertible bonds outstanding during the entire year. The preferred stock was convertible into​ 40,000 shares of common stock. During the current​ year, Hutchins paid dividends of​ $1.00 per share on the common stock and​ $2.00 per share on the preferred stock. Each​ $1,000 bond was convertible into 50 shares of common stock. The net income for the year was​ $1,000,000, and the...
Swifty Corporation had 190000 shares of common stock, 19600 shares of convertible preferred stock, and $1430000...
Swifty Corporation had 190000 shares of common stock, 19600 shares of convertible preferred stock, and $1430000 of 5% convertible bonds outstanding during 2018. The preferred stock is convertible into 39500 shares of common stock. During 2015, Swifty paid dividends of $0.90 per share on the common stock and $3 per share on the preferred stock. Each $1,000 bond is convertible into 30 shares of common stock. The net income for 2018 was $602000 and the income tax rate was 35%....
QUESTION 21 Dunn, Inc. had 200,000 shares of $20 par common stock and 20,000 shares of...
QUESTION 21 Dunn, Inc. had 200,000 shares of $20 par common stock and 20,000 shares of $100 par, 6%, cumulative, convertible preferred stock outstanding for the entire current year ended December 31. Each preferred share is convertible into five shares of common stock. Dunn's net income for the year was $840,000. For the current year ended December 31, the diluted earnings per share is $2.40 $2.80 $3.60 $4.20
            On January 2, 2019, Gino Co. issued at par $200,000 of 9% convertible bonds. Each...
            On January 2, 2019, Gino Co. issued at par $200,000 of 9% convertible bonds. Each $1,000 bond is convertible into 20 shares. No bonds were converted during 2019. Gino had 50,000 shares of common stock outstanding during 2019. Gino's 2019 net income was $150,000 and the income tax rate was 25%. Compute Gino's EPS and diluted earnings per share for 2019 (rounded to the nearest penny).
XYZ Company had 200,000 shares of common stock outstanding on December 31, 2020. On July 1,...
XYZ Company had 200,000 shares of common stock outstanding on December 31, 2020. On July 1, 2021, XYZ issued an additional 55,000 shares for cash. On January 1, 2021, XYZ issued 25,000 shares of convertible preferred stock. The preferred stock had a par value of $100 per share and paid a 5% dividend. Each share of preferred stock is convertible into 8 shares of common. During 2021, XYZ paid the regular annual dividend on the preferred and common stock. Net...
PROBLEM 3             On January 2, 2019, Gino Co. issued at par $200,000 of 9% convertible...
PROBLEM 3             On January 2, 2019, Gino Co. issued at par $200,000 of 9% convertible bonds. Each $1,000 bond is convertible into 20 shares. No bonds were converted during 2019. Gino had 50,000 shares of common stock outstanding during 2019. Gino's 2019 net income was $150,000 and the income tax rate was 25%. Compute Gino's EPS and diluted earnings per share for 2019 (rounded to the nearest penny). Show all computations.
Ahnberg Corporation had 560,000 shares of common stock issued and outstanding at January 1. No common...
Ahnberg Corporation had 560,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1, Ahnberg issued 180,000 shares of convertible preferred stock. The preferred shares are convertible into 360,000 shares of common stock. During the year Ahnberg paid $108,000 cash dividends on the preferred stock. Net income was $1,060,000. What were Ahnberg's basic and diluted earnings per share for the year? (Round your answers to 2 decimal places.)...
Knight Co. owned 80% of the common stock of Stoop Co. Stoop had 50,000 shares of...
Knight Co. owned 80% of the common stock of Stoop Co. Stoop had 50,000 shares of $5 par value common stock and 2,000 shares of preferred stock outstanding. Each preferred share received an annual per share dividend of $2 and is convertible into four shares of common stock. Knight did not own any of Stoop's preferred stock. Stoop also had 600 bonds outstanding, each of which is convertible into ten shares of common stock. Stoop's annual after-tax interest expense for...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT