On January 1, 2022, Shamrock SA issued 10-year, €1,870,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 15 ordinary shares of Shamrock. Shamrock's net income in 2023 was €462,800, and its tax rate was 40%. Interest expense on the liability component in 2023 was €130,900. The company had 104,000 ordinary shares outstanding throughout 2022. None of the bonds were converted in 2022. (a) Compute diluted earnings per share for 2022. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share (b) Compute diluted earnings per share for 2022, assuming the same facts as above, except that €1,040,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Shamrock. (Round answer to 2 decimal places, eg. 2.55.) Diluted earnings per share

On January 1, 2022, Shamrock SA issued 10-year, €1,870,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 15 ordinary shares of Shamrock. Shamrock's net income in 2023 was €462,800, and its tax rate was 40%. Interest expense on the liability component in 2023 was €130,900. The company had 104,000 ordinary shares outstanding throughout 2022. None of the bonds were converted in 2022. (a) Compute diluted earnings per share for 2022. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share (b) Compute diluted earnings per share for 2022, assuming the same facts as above, except that €1,040,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Shamrock. (Round answer to 2 decimal places, eg. 2.55.) Diluted earnings per share

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 26E: Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of...

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Tama Companys capital structure consists of common stock and convertible bonds. At the beginning of 2019, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of 80,000 and were issued in 2016 at par. Each 1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2019, the company earned net income of 79,200 and was subject to an income tax rate of 30%. Required: Compute the 2019 diluted earnings per share.
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.
On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
On January 1, 2025, Sheridan Company issued 10-year, $1,920,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 14 shares of Sheridan common stock. Sheridan's net income in 2025 was $478,500, and its tax rate was 20%. The company had 110,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $1,100,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Sheridan common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ tA 4.17 3.45
On January 1, 2025, Nash Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Nash common stock. Nash's net income in 2025 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Nash common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share
On January 1, 2025, Swifty Company issued 10-year, $1,860,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Swifty common stock. Swifty's net income in 2025 was $412,800, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ 3.99 b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Swifty common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share
Sunland Inc. issued $3 million of 10-year, 9% convertible bonds on June 1, 2023, at 98 plus accrued interest. The bonds were dated April 1, 2023, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion privileges would have sold at 97 plus accrued interest. On April 1, 2024, $0.75 million of these bonds were converted into 15,000 common shares. Accrued interest was paid in cash at the time of conversion. Assume that the company follows IFRS. (a) Your answer is partially correct. Prepare the entry to record the issuance of the convertible bonds on June 1, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.) Date Account Titles and Explanation June 1, 2023 Cash Bonds Payable Interest Payable…
On January 1, 2025, Novak Company issued 10-year, $2,150,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Novak common stock. Novak's net income in 2025 was $518,950, and its tax rate was 20%. The company had 97,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $ b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $970,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Novak common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share $
On January 1, 2025, Coronado Company issued 10-year, $1,840,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Coronado common stock. Coronado's net income in 2025 was $473,800, and its tax rate was 20%. The company had 103,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025. a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share b. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $1,030,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Coronado common stock. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share 4.24 $ 4.38
MHB Ltd. sold $6,740,000 of 12% bonds, which were dated March 1, 2023, on June 1, 2023. The bonds paid interest on September 1 and March 1 of each year. The bonds' maturity date was March 1, 2033, and the bonds were issued to yield 14%. MHB's fiscal year-end was February 28, and the company followed IFRS. On June 1, 2024, MHB bought back $2,740,000 worth of bonds for $2,640,000 plus accrued interest. (a) Your answer is partially correct. Using 1. a financial calculator, or 2. Excel function PV, calculate the issue price of the bonds and prepare the entry for the issuance of the bonds. Hint: Use the account Interest Expense in your entry). (Round answer to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash Interest Expense Bonds…
On January 1, 2020, Bonita Company issued 10-year, $1,810,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Bonita common stock. Bonita’s net income in 2020 was $403,200, and its tax rate was 20%. The company had 96,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (b) Compute diluted earnings per share for 2020, assuming the same facts as above, except that $960,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Bonita common stock.