Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Textbook Question
Chapter 16, Problem 24P
Frost Company has accumulated the following information relevant to its 2019 earningsper share.
- 1. Net income for 2019: $150,500.
- 2. Bonds payable: On January 1, 2019, the company had issued 10%, $200,000 bonds at 110. The premium is being amortized in the amount of $1,000 per year. Each $1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted.
- 3. Bonds payable: On December 31, 2017, the company had issued $540,000 of 5.8% bonds at par. Each $1,000 bond is currently convertible into 11.6 shares of common stock. To date, no bonds have been converted.
- 4.
Preferred stock : On July 3, 2018, the company had issued 3,800 shares of 7.5%, $100 par, preferred stock at $108 per share. Each share of preferred stock is currently convertible into 2.45 shares of common stock. To date, no preferred stock has been converted and no additional shares of preferred stock have been issued. The current dividends have been paid. - 5. Common stock: At the beginning of 2019, 25,000 shares were outstanding. On August 3, 7,000 additional shares were issued. During September, a 20% stock dividend was declared and issued. On November 30, 2,000 shares were reacquired as
treasury stock . - 6. Compensatory share options: Options to acquire common stock at a price of $33 per share were outstanding during all of 2019. Currently, 4,000 shares may be acquired. To date, no options have been exercised. The unrecognized compens Frost Company has accumulated the following information relevant to its 2019 earnings ns is $5 per share.
- 7. Miscellaneous: Stock market prices on common stock averaged $41 per share during 2019, and the 2019 ending stock market price was $40 per share. The corporate income tax rate is 30%.
Required:
- 1. Compute the basic earnings per share. Show supporting calculations.
- 2. Compute the diluted earnings per share. Show supporting calculations.
- 3. Indicate which earnings per share figure(s) Frost would report on its 2019 income statement.
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Chapter 16 Solutions
Intermediate Accounting: Reporting And Analysis
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