Question

Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net...

Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $496,000. Primus has 50,000 shares of common stock outstanding. Sonston reports net income of $96,000 for the period with 40,000 shares of common stock outstanding. Sonston also has 5,000 stock warrants outstanding that allow the holder to acquire shares at $12.50 per share. The value of this stock was $25 per share throughout the year. Primus owns 2,850 of these warrants. What amount should Primus report for diluted earnings per share? (Round your intermediate percentage value to the nearest whole number and the final answer to 2 decimal places.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Sonston's Diluted EPS
Net Income $96,000.00
Shares outstanding 40000
Assumed conversion of stock warrants 5000
Repurchase of treasury stock with proceeds of Stock Warrants (5,000 × $12.50 = $62,500 ÷ $25) -2500 2500
Shares for diluted earnings per share computation 42500
Shares controlled by Primus: 40000 + (2500 x 2850/5000) 41,425
Percentage of total held by Primus = 41425/42500 97.47%
Income to be included in Primus’s diluted EPS = $96,000 × 97.47% $93,571.76
Primus's Diluted Earnings Per Share:
Net income – Primus $496,000.00
Net income included from Sonston $93,571.76
Earnings for diluted EPS $589,571.76
Outstanding shares of Primus 50000
Primus's Diluted Earnings Per Share: $589,571.76/50000 $11.79 Per Share
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
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net...
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $616,000. Primus has 50,000 shares of common stock outstanding. Sonston reports net income of $216,000 for the period with 40,000 shares of common stock outstanding. Sonston also has 5,000 stock warrants outstanding that allow the holder to acquire shares at $11.00 per share. The value of this stock was $22 per share throughout the year. Primus owns...
Bravo, Inc., owns all of the stock of Echo, Inc. For 2021, Bravo reports income (exclusive...
Bravo, Inc., owns all of the stock of Echo, Inc. For 2021, Bravo reports income (exclusive of any investment income) of $480,000. Bravo has 80,000 shares of common stock outstanding. It also has 5,000 shares of preferred stock outstanding that pay a dividend of $15,000 per year. Echo reports net income of $290,000 for the period with 80,000 shares of common stock outstanding. Echo also has a liability from its 10,000, $100 bonds that pay annual interest of $8 per...
Bravo, Inc., owns all of the stock of Echo, Inc. For 2021, Bravo reports income (exclusive...
Bravo, Inc., owns all of the stock of Echo, Inc. For 2021, Bravo reports income (exclusive of any investment income) of $480,000. Bravo has 80,000 shares of common stock outstanding. It also has 5,000 shares of preferred stock outstanding that pay a dividend of $15,000 per year. Echo reports net income of $290,000 for the period with 80,000 shares of common stock outstanding. Echo also has a liability from its 10,000, $100 bonds that pay annual interest of $8 per...
Bravo, Inc., owns all of the stock of Echo, Inc. For 2021, Bravo reports income (exclusive...
Bravo, Inc., owns all of the stock of Echo, Inc. For 2021, Bravo reports income (exclusive of any investment income) of $480,000. Bravo has 80,000 shares of common stock outstanding. It also has 5,000 shares of preferred stock outstanding that pay a dividend of $15,000 per year. Echo reports net income of $290,000 for the period with 80,000 shares of common stock outstanding. Echo also has a liability from its 10,000, $100 bonds that pay annual interest of $8 per...
Computing Diluted EPS: Stock Options Rand Inc. had net income of $1,760,000. During the year, 400,000...
Computing Diluted EPS: Stock Options Rand Inc. had net income of $1,760,000. During the year, 400,000 shares were outstanding on average and Rand's common stock sold at an average market price of $50 per share. In addition, Rand had 40,000 stock options outstanding to purchase a total of 40,000 common shares at $25 for each option exercised. Required a. Compute basic EPS. b. Compute diluted EPS.
Myers Drugs Inc. has 3 million shares of stock outstanding. Earnings after taxes are $6 million....
Myers Drugs Inc. has 3 million shares of stock outstanding. Earnings after taxes are $6 million. Myers also has warrants outstanding that allow the holder to buy 100,000 shares of stock at $10 per share. The stock is currently selling for $50 per share. a. Compute basic earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. Compute diluted earnings per share considering the possible impact of the warrants. Assume the cash proceeds...
Murray Company reports net income of $893,000 for the year. It has no preferred stock, and...
Murray Company reports net income of $893,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 380,000 shares.    Compute its basic earnings per share. Murray Company reports net income of $893,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 380,000 shares.    Compute its basic earnings per share. Basic Earnings Per Share Choose Numerator: / Choose Denominator: = Basic EPS – / = Basic EPS –...
The following information was taken from the books and records of Cullumber, Inc.: 1. Net Income...
The following information was taken from the books and records of Cullumber, Inc.: 1. Net Income $391,400 2. Capital structure: a. Convertible 6% bonds. Each of the 290, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 290,000 b. $10 par common stock, 190,000 shares issued and outstanding during the entire year. 1,900,000 c. Stock warrants outstanding to buy 15,040 shares of common stock at $20 per share. 3....
1. Windsor Corporation had 318,000 shares of common stock outstanding on January 1, 2017. On May...
1. Windsor Corporation had 318,000 shares of common stock outstanding on January 1, 2017. On May 1, Windsor issued 31,500 shares. (a) Compute the weighted-average number of shares outstanding if the 31,500 shares were issued for cash. Weighted-average number of shares outstanding $ (b) Compute the weighted-average number of shares outstanding if the 31,500 shares were issued in a stock dividend. Weighted-average number of shares outstanding $ 2. Sarasota Corporation reported net income of $230,000 in 2017 and had 47,700...
Throughout 2015, Smith had 200,000 shares of common stock outstanding. Smith's net income for the year...
Throughout 2015, Smith had 200,000 shares of common stock outstanding. Smith's net income for the year ended December 31, 2015 was $880,000. Smith's income tax rate is 20%. During the entire year ending 12-31-15, Smith had 15,000 outstanding employee stock options. Each option had an exercise price of $60 per share of Smith common stock. During the year ended 12-31-15, the average market price of Smith's common stock was $50 per share. As of 12-31-15, Smith had $10,000,000 of 10%...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT