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Information about the Jack and Jill Companies are as follows:   Jack Company: common stock $1 par...

Information about the Jack and Jill Companies are as follows:  
Jack Company: common stock $1 par $10,000
APIC $90,000
retained earnings $80,000
Jill Company : preferred stock $10 par 5% $200
20 shares
common stock $1 par $500
APIC $50
retained earnings $50
   Jack owns all of the outstanding common stock of Jill Company
Part 1:  Jack reported unconsolidated income of $20,000; Jill reported unconsolidated income of $100
The preferred stock is non-cumulative non-convertible what is Jack's earnings per share?
Part 2:  Jack reported unconsolidated income of $20,000 Jill reported unconsolidated income of $100
The preferred stock is non-cumulative.  Each share of preferred stock can be converted into 4 shares of common stock
What is Jack's earnings per share.  
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Answer #1

Earnings Per Share = Net Income - Prefered Dividend / Average outstanding common shares

1 Jack 20000
Jill 100
Total Net Income 20100
Prefered Dividend (200*5%) 10
Average Outstanding Common Stock
Jack Company = Common Stock (10000× 0.5) 5000
=100000[10000 +90000(APIC)] × 0.5 50000
Total Average Outstanding Common stock 55000
Jill company = Common Stock (500× 0.5) 250
= 550[ 500+50(APIC)] ×0.5 275
Total Average Outstanding Common Stock 525
Jack's Earnings Per Share $0.36
20100-10 / 55525 = 0.3618
2
Common stock after Preference shares is converted (500+20*4) 580
Jack's Earnings Per Share $0.36
20100-10/ 55605 = 0.3612
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