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The Swifty Corporation issued 10-year, $4,080,000 par, 7% callable convertible subordinated debentures on January 2, 2020....
The Swifty Corporation issued 10-year, $4,080,000 par, 7% callable convertible subordinated debentures on January 2, 2020. The bonds have a par value of $1,000, with interest payable annually. The current conversion ratio is 13:1, and in 2 years it will increase to 20:1. At the date of issue, the bonds were sold at 98. Bond discount is amortized on a straight-line basis. Swifty’s effective tax was 20%. Net income in 2020 was $10,950,000, and the company had 1,830,000 shares outstanding during the entire year.
Compute both basic and diluted earnings per share.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
The Carla Corporation issued 10-year, $5,060,000 par, 7% callable convertible subordinated debentures on January 2, 2020....
The Carla Corporation issued 10-year, $5,060,000 par, 7%
callable convertible subordinated debentures on January 2, 2020.
The bonds have a par value of $1,000, with interest payable
annually. The current conversion ratio is 14:1, and in 2 years it
will increase to 18:1. At the date of issue, the bonds were sold at
99. Bond discount is amortized on a straight-line basis. Carla’s
effective tax was 20%. Net income in 2020 was $11,200,000, and the
company had 1,815,000 shares outstanding...
The Novak Corporation issued 10-year, $5,980,000 par, 6% callable convertible subordinated debentures on January 2, 2017....
The Novak Corporation issued 10-year, $5,980,000 par, 6%
callable convertible subordinated debentures on January 2, 2017.
The bonds have a par value of $1,000, with interest payable
annually. The current conversion ratio is 15:1, and in 2 years it
will increase to 17:1. At the date of issue, the bonds were sold at
96. Bond discount is amortized on a straight-line basis. Novak’s
effective tax was 35%. Net income in 2017 was $7,700,000, and the
company had 1,845,000 shares outstanding...
On January 1, 2017, Olson Corporation issued $6 million of 10-year, 7%, convertible debentures at 104....
On January 1, 2017, Olson Corporation issued $6 million of
10-year, 7%, convertible debentures at 104. Investment bankers
believe that the debenture would have sold at 102 without the
conversion privilege. Interest is to be paid semi-annually on June
30 and December 31. Each $1,000 debenture can be converted into
five common shares of Olson after December 31, 2018. On January 1,
2016, $400,000 of debentures is converted into common shares, and
on March 31, 2019, an additional $400,000 of...
On January 1, 2017, Waterway Corporation issued $3,680,000 of 10-year, 8% convertible debentures at 102. Interest...
On January 1, 2017, Waterway Corporation issued $3,680,000 of
10-year, 8% convertible debentures at 102. Interest is to be paid
semiannually on June 30 and December 31. Each $1,000 debenture can
be converted into 8 shares of Waterway Corporation $100 par value
common stock after December 31, 2018.
On January 1, 2019, $368,000 of debentures are converted into
common stock, which is then selling at $110. An additional $368,000
of debentures are converted on March 31, 2019. The market price...
Exercise 16-6 On January 1, 2017, Stellar Corporation issued $4,060,000 of 10-year, 9% convertible debentures at...
Exercise 16-6
On January 1, 2017, Stellar Corporation issued $4,060,000 of
10-year, 9% convertible debentures at 104. Interest is to be paid
semiannually on June 30 and December 31. Each $1,000 debenture can
be converted into 8 shares of Stellar Corporation $101 par value
common stock after December 31, 2018.
On January 1, 2019, $406,000 of debentures are converted into
common stock, which is then selling at $111. An additional $406,000
of debentures are converted on March 31, 2019. The...
Exercise 16-6 On January 1, 2017, Riverbed Corporation issued $4,140,000 of 10-year, 8% convertible debentures at...
Exercise 16-6
On January 1, 2017, Riverbed Corporation issued $4,140,000 of
10-year, 8% convertible debentures at 104. Interest is to be paid
semiannually on June 30 and December 31. Each $1,000 debenture can
be converted into 8 shares of Riverbed Corporation $100 par value
common stock after December 31, 2018.
On January 1, 2019, $414,000 of debentures are converted into
common stock, which is then selling at $111. An additional $414,000
of debentures are converted on March 31, 2019. The...
Dickinson Limited issued 10-year, 7% debentures with a face value of $2 million on January 1,...
Dickinson Limited issued 10-year, 7% debentures with a
face value of $2 million on January 1, 2010. The proceeds received
were $1.7 million. The discount was amortized on the straight-line
basis over the 10-year term. The terms of the debenture stated that
the debentures could be redeemed in full at any point before the
maturity date, at a price of 105 of the principal. There wan no
requirement for a sinking fund. On January 1, 2017, Dickinson inued
a mortgage...
Dickinson Limited issued 10-year, 7% debentures with a face value of $2 million on January 1,...
Dickinson Limited issued 10-year, 7% debentures with a face
value of $2 million on January 1, 2010. The proceeds received were
$1.7 million. The discount was amortized on the straight-line basis
over the 10-year term. The terms of the debenture stated that the
debentures could be redeemed in full at any point before the
maturity date, at a price of 105 of the principal. There was no
requirement for a sinking fund. On January 1, 2017, Dickinson
issued a mortgage...
The Rockstar Corporation issued 10-year $900,000 par 6% convertible bonds on January 1, 2018 at 98....
The Rockstar Corporation issued 10-year $900,000 par 6%
convertible bonds on January 1, 2018 at 98. The bonds have a par
value of $1,000 with interest payable annually. Each bond is
convertible into 10 shares of common stock; in two years this ratio
will increase, meaning that each bond will be convertible into 30
shares of common stock. Assume Rockstar uses straight-line
amortization for its bonds and that its effective tax rate is 35%.
Net income in 2018 is $2,600,000...
TREATMENT OF CONVERTIBLE DEBENTURES LS Limited issued 1 million six-year debentures on 1 January 2018 at...
TREATMENT OF CONVERTIBLE DEBENTURES
LS Limited issued 1 million six-year debentures on 1 January 2018
at par value of £ 100 each at a fixed rate of 6% per annum.
Interest payable at the end of each year whereas the principal is
to be repaid in two equal installments at the end of 2022 and
2023.
Debentures were issued with an option to convert 10 debentures into
4 ordinary shares of LS Limited till the date of first principal
redemption....
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