Question

Oriole Inc. had net income for the current year ending December 31, 2017 of $919,840. During...

Oriole Inc. had net income for the current year ending December 31, 2017 of $919,840. During the entire year, there were 509,000 common shares outstanding. The company had two classes of preferred shares outstanding: the Class A preferred shares were $2.00 cumulative shares of which 12,000 were outstanding, and were convertible to common shares at a rate of 1:1. There were 105,000 $6.00 Class B non-cumulative preferred shares outstanding that were also convertible at a rate of 1:1. Oriole had outstanding a $1,000,000, 6% bond issued in 2009 that was convertible to 22,000 common shares. The company also had outstanding a $1,000,000, 4% bond issued in 2010 that was convertible to 26,000 common shares. No dividends were declared or paid this year. Oriole’s tax rate is 37%.

1. Calculate basic earnings per share. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately.)

2. Calculate diluted earnings per share. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately.)

Homework Answers

Answer #1

1.

Basic earnings per share   $1.81

2.

Diluted earnings per share   $1.36

Working:

Net income A 919840
Common shares outstanding B 509000
Common shares from Class A preferred shares C 12000
Common shares from Class B preferred shares D 105000
Common shares from 6% bonds E 22000
Common shares from 4% bonds F 26000
Total number of common shares if all are converted (B+C+D+E+F) G 674000
Basic earnings per share (A / B) $1.81
Diluted earnings per share (A / G) $1.36
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2020, Ivanhoe Inc. issued $2.05 million of face value, five–year, 7% bonds at...
On January 1, 2020, Ivanhoe Inc. issued $2.05 million of face value, five–year, 7% bonds at par. Each $1,000 bond is convertible into 14 common shares. Ivanhoe’s net income in 2020 was $249,000, and its tax rate was 35%. The company had 94,000 common shares outstanding throughout 2020. None of the bonds were exercised in 2020. For simplicity, ignore the requirement to record the bonds’ debt and equity components separately. (a) Calculate diluted earnings per share for the year ended...
For the fiscal year ended December 31, 2019, a company reported Net Income of $7,000,000. The...
For the fiscal year ended December 31, 2019, a company reported Net Income of $7,000,000. The Dillie company had 3,000,000 shares of $1 par value common stock outstanding all year. In addition, the company had $500,000 par value of 10% cumulative, non-convertible preferred stock outstanding all year. In December 2019, the company declared and paid a preferred dividend of $50,000, as well as a $0.10 per share dividend to common shareholders. Furthermore, on January 1, 2019 the company issued at...
During the current year, Chewie Inc., had outstanding: 30,000 shares of common stock; 8,000 shares of...
During the current year, Chewie Inc., had outstanding: 30,000 shares of common stock; 8,000 shares of $100 par, 10% cumulative preferred stock; and 3,500 bonds that are $1,000 par and 8% convertible. The bonds were originally issued at par, and each bond was convertible into 10 shares of common stock. During the year, net income was $250,000, no dividends were declared, and the tax rate was 30%. What amount was Chewie's basic earnings per share for the current year? Round...
Ringmeup Inc. had net income of $162,200 for the year ended December 31, 2019. At the...
Ringmeup Inc. had net income of $162,200 for the year ended December 31, 2019. At the beginning of the year, 38,000 shares of common stock were outstanding. On May 1, an additional 17,000 shares were issued. On December 1, the company purchased 4,300 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend...
Ringmeup Inc. had net income of $101,800 for the year ended December 31, 2019. At the...
Ringmeup Inc. had net income of $101,800 for the year ended December 31, 2019. At the beginning of the year, 44,000 shares of common stock were outstanding. On May 1, an additional 11,000 shares were issued. On December 1, the company purchased 4,100 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend...
Ringmeup, Inc., had net income of $176,900 for the year ended December 31, 2016. At the...
Ringmeup, Inc., had net income of $176,900 for the year ended December 31, 2016. At the beginning of the year, 39,000 shares of common stock were outstanding. On May 1, an additional 16,000 shares were issued. On December 1, the company purchased 4,500 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup, Inc., paid the annual...
Farmers Corporation issued $4 million of 10-year, 7% callable convertible subordinated debentures on January 2, 2017....
Farmers Corporation issued $4 million of 10-year, 7% callable convertible subordinated debentures on January 2, 2017. The debentures have a face value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in two years it will increase to 18:1. At the date of issue, the bonds were sold at 98 to yield an 8.2886% effective interest rate. Bond discount is amortized using the effective interest method. Farmers’ effective tax was 35%. Net income in 2017 was...
On January 1, 2017, Carla Vista Ltd. had 510,000 common shares outstanding. During 2017, it had...
On January 1, 2017, Carla Vista Ltd. had 510,000 common shares outstanding. During 2017, it had the following transactions that affected the common share account: Feb. 1 Issued 183,000 shares. Mar. 1 Issued a 12% stock dividend. May 1 Acquired 210,000 common shares and retired them. June 1 Issued a 3-for-1 stock split. Oct. 1 Issued 51,000 shares. The company’s year end is December 31. Determine the weighted average number of shares outstanding as at December 31, 2017. Assume that...
Ringmeup Inc. had net income of $142,100 for the year ended December 31, 2019. At the...
Ringmeup Inc. had net income of $142,100 for the year ended December 31, 2019. At the beginning of the year, 36,000 shares of common stock were outstanding. On May 1, an additional 17,000 shares were issued. On December 1, the company purchased 4,900 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend...
Ringmeup Inc. had net income of $123,100 for the year ended December 31, 2019. At the...
Ringmeup Inc. had net income of $123,100 for the year ended December 31, 2019. At the beginning of the year, 43,000 shares of common stock were outstanding. On May 1, an additional 18,000 shares were issued. On December 1, the company purchased 4,200 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend...