Question

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 face value a $1,000,000, 6% convertible bond with annual interest payments due at the end of each year. The bonds are convertible into 200,000 shares of the company’s $1 par value common stock. The company’s tax rate is 21% (and there are no temporary or permanent book-tax differences). What did the company report for diluted earnings per share on its December 31, 2019 Income Statement?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:

For Calculation of Diluted earnings per share we have to adjust the earnings.

So Earnings for DPS is as follows

Net Income $ 70,00,000
Less: Preference Dividend $ 50,000
Earnings for common shareholders $ 69,50,000
Add: Post tax interest on Convertible Bond ($10,00,000 * 6% * (1-0.21) $ 47,400
Earnings for Diluted per share $ 69,97,400

No. of Common shares outstanding = 30,00,000

Add: Shares from conversion of bonds = 2,00,000

Total Shares outstanding = 32,00,000

Therefore,

DPS = Earnings / Total shares outstanding

= 69,97,400 / 32,00,000

=2.186 i.e 2.19 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
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 $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 $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...
Ringmeup Inc. had net income of $134,800 for the year ended December 31, 2019. At the...
Ringmeup Inc. had net income of $134,800 for the year ended December 31, 2019. At the beginning of the year, 40,000 shares of common stock were outstanding. On May 1, an additional 14,000 shares were issued. On December 1, the company purchased 4,800 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 $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 $196,600 for the year ended December 31, 2019. At the...
Ringmeup Inc. had net income of $196,600 for the year ended December 31, 2019. At the beginning of the year, 41,000 shares of common stock were outstanding. On May 1, an additional 17,000 shares were issued. On December 1, the company purchased 4,800 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...
For the fiscal year ending on December 31, 2019, 100Rock Inc. reported Net Income of $700,000...
For the fiscal year ending on December 31, 2019, 100Rock Inc. reported Net Income of $700,000 and basic earnings per share of $3.50. In addition, the company has 20,000 stock options outstanding all year that were previously granted to senior level managers. These stock options enable the option holders to purchase 20,000 shares of $1 par value common stock at the $15 strike price. The stock options are fully vested but were not exercised during the year. The company’s average...
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...
A company earned net income of $1,500,000 in 2019 and had 150,000 shares of common stock...
A company earned net income of $1,500,000 in 2019 and had 150,000 shares of common stock outstanding on January 1, 2019. The tax rate is 20% and the common stock sold at an average market price of $24 per share during the period. The company had the following transactions affecting common shares outstanding during the year: • Issued 50,000 shares of common stock on March 1, 2019 • Repurchased 5,000 shares of common stock on June 1, 2019 • Had...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT