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The Swirlie Company had net income for 2xx9 of $300,000. Beginning balance in $100 par, 8%...
The Swirlie Company had net income for 2xx9 of $300,000. Beginning balance in $100 par, 8% cumulative preferred stock is $1,000,000. No dividends are in arrears. $1,000,000 in 6% convertible bonds are outstanding during the year. Each $1,000 bond is convertible into 2 shares of common stock. Beginning balance in retained earnings is $400,000 Beginning of the year outstanding common stock shares 100,000 Par value is $10 Issued additional shares common stock March 1st 10,000 Received $12 per share Purchased shares of treasury stock on September 1 5,000 Paid $75,000 Issued 2 for 1 stock split on October 17th. Tax Rate is 20% Required: What is diluted earnings per share for the year?
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Expert Solution
| 1 | Change | Final | Period in month | Ratio (period/12) | Average number of outstanding shares (Final*Ratio) | ||
| Jan 1 2009 | Beginning | 100000 | 2 | 0.17 | 16667 | ||
| Mar 1 | New | 10000 | 110000 | 6 | 0.50 | 55000 | |
| Sep 1 | Purchase | -5000 | 105000 | 1.5 | 0.13 | 13125 | |
| Oct 17 | Split | 2 for 1 | 105000 | 210000 | 2.5 | 0.21 | 43750 |
| 12 | 128542 | ||||||
| Additional share for the purpose of Dilluted earning per share | |||||||
| 8% convertible preferred stock | 10000 | ||||||
| 9% Convertible Bond | 1000000/1000*2 | 2000 | |||||
| Total Additional shares for Dilluted EPS | 12000 | ||||||
| Dilluted EPS: | |||||||
| Net After tax income | 300000 | ||||||
| Add: back interest on bond | 1000000*6% | 60000 | |||||
| Less: Income Tax 20% | 60000*20% | 12000 | |||||
| Net income for Dilluted EPS | 348000 | ||||||
| Diluted EPS | 348000/(128542+12000 additional share) | ||||||
| Diluted EPS | 2.48 |
ekkarill92 answered 2 years agoRelated Solutions
The Swirlie Company had net income for 2018 of $300,000. There is a $1,000,000 beginning balance...
The Swirlie Company had net income for 2018 of $300,000. There
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