Question

In: Accounting

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding...

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding at the beginning of 2016. Francis issued 3,900 additional shares on May 1 and 2,600 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are: Convertible preferred stock: 3,250 shares of 9.0%, $50 par, preferred stock were issued on January 2, 2013, for $60 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared and paid. To date, no preferred stock has been converted. Convertible bonds: Bonds with a face value of $325000 and an interest rate of 5.0% were issued at par in 2015. Each $1000 bond is convertible into 25 shares of common stock. To date, no bonds have been converted. Francis earned net income of $79000 during 2016. The income tax rate is 30%. Required: 1. Compute the number of shares of common stock that Francis should use in calculating basic earnings per share for 2016. Weighted average shares outstanding: shares 2. Calculate basic earnings per share for 2016. If required, round your answer to two decimal places. Basic earnings per share: $ 3. Calculate diluted earnings per share for 2016 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to two decimal places. Diluted earnings per share: $ Incremental earnings per share Bonds: $ Preferred: $ 4a. Assume the same facts as above except that net income included a loss from discontinued operations of $12000 net of income taxes. Compute basic EPS. You do not have to calculate diluted EPS for this case. If required, round your answer to two decimal places. Basic earning per share: $ 4b. Show how the basic EPS you calculated should be reported to shareholders. You do not have to calculate diluted EPS. Francis Company EPS Computations EPS Based on:

Solutions

Expert Solution

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Part 1
Time Shares Weighted Average
Jan 1 to May 1 4/12       31,200                            10,400
May 1 to Sep 30 5/12         3,900                              1,625
Sep 30 to Dec 31 3/12         2,600                                  650
Weighted Average shares outstanding                            12,675
Part 2
Basic Earning per Share
Net Income $   79,000
Less: Preferred Dividend $ -14,625
3,250 Shares*$50 Par*9%
$   64,375
Divided By: Weighted Avg Shares       12,675
Basic Earning per Share $       5.08
Part 3
Diluted Earning per share
Net Income $   79,000
Interest on Bond $325,000*5% $   16,250
Less: Tax on Bond Interest $16,250*30% $    -4,875 $   11,375
Income for Diluted EPS $   90,375
No of Shares including Potential shares:
Weighted Average shares outstanding       12,675
Add: Preferred 3250*3         9,750
Add: Bond-Convertible 325000/1000*25         8,125
No of Shared for Diluted EPS       30,550
Diluted EPS $90,375/30,550 $       2.96
Incremental EPS:
Bonds 11,375/8,125 $       1.40
Preferred Stock 14,625/9,750 $       1.50
Part 4
Basic EPS
Income from Continuing Operations $   91,000 $       6.03 (91000-14625)/12675
Loss from Discontinuing Operations $ -12,000 $      -0.95 12000/12675
Net Income $   79,000 $       5.08 (79000-14625)/12675

ekkarill92 answered 3 months ago
Next > < Previous

Related Solutions

Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding...
Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 31,200 shares of common stock outstanding at the beginning of 2016. Francis issued 3,900 additional shares on May 1 and 2,600 additional shares on September 30. It also has two convertible securities outstanding at the end of 2016. These are: Convertible preferred stock: 3,250 shares of 9.0%, $50 par, preferred stock were issued on January 2, 2013, for $60 per share. Each share of preferred stock is convertible into 3...
Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 16,800 shares of common stock outstanding...
Convertible Preferred Stock, Convertible Bonds, and EPS Francis Company has 16,800 shares of common stock outstanding at the beginning of 2019. Francis issued 2,100 additional shares on May 1 and 1,400 additional shares on September 30. It also has two convertible securities outstanding at the end of 2019. These are: Convertible preferred stock: 1,750 shares of 8.0%, $50 par, preferred stock were issued on January 2, 2016, for $55 per share. Each share of preferred stock is convertible into 2...
Pealand Company has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding....
Pealand Company has 50,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $1.00 par value. The preffered stock has a $100 par value, a 5% dividend rate, and is noncumulative. On October 31, 2015, the company declares dividends of $0.25 per share for common. Provide the journal entry for the declaration of dividends.
Exercise 19-19 EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds...
Exercise 19-19 EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds [LO19-5,19-6, 19-7, 19-8, 19-9] On December 31, 2017, Berclair Inc. had 480 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were...
Problem 19-13 (Algo) EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options; convertible bonds;...
Problem 19-13 (Algo) EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options; convertible bonds; contingently issuable shares [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9, 19-10, 19-11] On December 31, 2020, Dow Steel Corporation had 770,000 shares of common stock and 317,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $570,000 and $86,000 to common and preferred shareholders, respectively, on December 15, 2021....
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common stock is valued at $10 per share, with 2 million shares outstanding. It has a beta of 5, and market return is estimated to be 4% while treasury bills offer 1.5% risk-free rate. The preferred stock is valued at $15 per share, which pays dividend of $2 each year at a constant growth rate of 3%. Preferred stocks have 5 million shares outstanding. Finally,...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common...
(WACC) A company has common stock, preferred shares, and debt outstanding. As of today, the common stock is valued at $10 per share, with 2 million shares outstanding. It has a beta of 5, and market return is estimated to be 4% while treasury bills offer 1.5% risk-free rate. The preferred stock is valued at $15 per share, which pays dividend of $2 each year at a constant growth rate of 3%. Preferred stocks have 5 million shares outstanding. Finally,...
Baker Company has common and preferred stock outstanding as follows. Common stock: 100,000 shares, $30 par...
Baker Company has common and preferred stock outstanding as follows. Common stock: 100,000 shares, $30 par value 8 percent preferred stock: 10,000 shares, $100 par value Dividends on preferred stock have not been paid for the last three years (in addition to the current year). a. If the company pays a total of $120,000 in dividends, how much will the common stockholders receive per share if the preferred stock is not cumulative? (Round your answer to 2 decimal places.) b....
Spicer Reports Corp has 400,000 shares of common stock outstanding, 200,000 shares of preferred stock outstanding,...
Spicer Reports Corp has 400,000 shares of common stock outstanding, 200,000 shares of preferred stock outstanding, and 40,000 bonds. If the common shares are selling for $25 per share, the preferred shares are selling for $12.50 per share, and the bonds are selling for 97 percent of par, what would be the weight used for common stock equity in the computation of Spicer's WACC? A. 18.59% B. 19.49% C. 24.37% D. 62.50% E. 79.75% Comfort Chair, Inc. has a $1.5...
(TCO 4) Davis company has outstanding 120,000 shares of common stock and 5,000 shares of preferred...
(TCO 4) Davis company has outstanding 120,000 shares of common stock and 5,000 shares of preferred stock as of January 1, 2015. The preferred stock is convertible, and can be converted into 4 shares of common stock for each share of preferred. During the year, the following common stock transactions took place: Issued common stock on March 1, in the amount of 4,000 shares Issued a stock dividend (small) on all stock outstanding at April 1. The % of the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT