Question
In: Accounting
Assume that the following data relative to Kane Company for 2018 is available: Net Income $2,790,000...
Assume that the following data relative to Kane Company for 2018
is available:
| Net Income | $2,790,000 | |||||
| Transactions in Common Shares | Change | Cumulative | ||||
| Jan. 1, 2018, Beginning number | 680,000 | |||||
| Mar. 1, 2018, Purchase of treasury shares | (66,600) | 613,400 | ||||
| June 1, 2018, Stock split 2-1 | 613,400 | 1,226,800 | ||||
| Nov. 1, 2018, Issuance of shares | 234,000 | 1,460,800 | ||||
| 6% Cumulative Convertible Preferred Stock | ||||||
| Sold at par, convertible into 200,000 shares of common (adjusted for split). | $1,000,000 | |||||
| Stock Options | ||||||
| Exercisable at the option price of $25 per share. Average market price in 2018, $30 (market price and option price adjusted for split). | 81,000 | shares |
1. Compute weighted average shares outstanding for 2018.
2. Compute the basic earnings per share for 2018.
3. Compute the diluted earnings per share for 2018.
Solutions
Expert Solution
| Computation of Weighted Average Shares Outstanding during the Year | |||
| Date | Particulars | Calculation | Final Amount |
| 01-Jan | Outstanding at the opening | 6,80,000 | |
| 01-Mar | Less: Repurchase of Treasury Share | 66000*10/12 | 55,000 |
| Sahres Available for Split | 6,25,000 | ||
| 01-Jun | 2 For 1 Split | 625000*2 | 12,50,000 |
| 01-Nov | Add:Issued | 234000*2/12 | 39,000 |
| 12,89,000 | |||
| 6% Convertible preference stock | 2,00,000 | ||
| Add: Stock Option | |||
| Share issue upon Exercise of Option | 81000 | ||
| Less: Treasury Stock Purchaseable With proceed (81000*25)/30 | 67500 | 13,500 | |
| 14,75,500 | |||
| Basic Earnign Per Share = | Earning Attributable to Comman Stock Holder | ||
| Weighted Avearge Share Outstanding | |||
| Earning Attributable to Comman Stock Holder= | Net Income-Preference Share Dividend | ||
| Earning Attributable to Comman Stock Holder= | 2790000-(1000000*6%) | ||
| Earning Attributable to Comman Stock Holder= | 2730000 | ||
| Basic Earnign Per Share = | 2730000/1289000 | 2.12 | |
| Diluted Earnign Per Share = | Earning Attributable to Comman Stock Holder including Potential Comman Stock Holder | ||
| Weighted Avearge Share Outstanding Including Potential Comman Stock | |||
| Diluted Earnign Per Share | 2790000/1475500 | 1.89 |
ekkarill92 answered 3 years agoRelated Solutions
Assume that the following data relative to Kane Company for 2018 is available: Net Income $2,800,000...
Assume that the following data relative to Kane Company for 2018
is available:
Net Income
$2,800,000
Transactions in Common Shares
Change
Cumulative
Jan. 1, 2018, Beginning number
650,000
Mar. 1, 2018, Purchase of treasury shares
(55,200)
594,800
June 1, 2018, Stock split 2-1
594,800
1,189,600
Nov. 1, 2018, Issuance of shares
216,000
1,405,600
6% Cumulative Convertible Preferred Stock
Sold at par, convertible into 190,000 shares of common
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$950,000
Stock Options
Exercisable at the option price of $25...
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Assume that the following data relative to Kane Company for 2018
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Net Income
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Transactions in Common Shares
Change
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Jan. 1, 2018, Beginning number
740,000
Mar. 1, 2018, Purchase of treasury shares
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668,000
June 1, 2018, Stock split 2-1
668,000
1,336,000
Nov. 1, 2018, Issuance of shares
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6% Cumulative Convertible Preferred Stock
Sold at par, convertible into 180,000 shares of common
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Stock Options
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Assume that the following data relative to Kane Company for 2018 is available: Net Income $2,890,000...
Assume that the following data relative to Kane Company for 2018
is available:
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Transactions in Common Shares
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Mar. 1, 2018, Purchase of treasury shares
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June 1, 2018, Stock split 2-1
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Nov. 1, 2018, Issuance of shares
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6% Cumulative Convertible Preferred Stock
Sold at par, convertible into 190,000 shares of common
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