AE16-13 Newton Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,000,000 shares of $10 par common stock. At no time has Newton issued any potentially dilutive securities. Listed below is a summary of Newton's common stock activities. Instructions (a) Compute the weighted average number of common shares used in computing earnings per common share for 2006 on the 2007 comparative income statement. 3159000 shares (b) Compute the weighted average number of common shares used in computing earnings per common share for 2007 on the 2007 comparative income statement. 5184000 shares (c) Compute the weighted average number of common shares to be used in computing earnings per common share for 2007 on the 2008 comparative income statement. 10368000 shares (d) Compute the weighted average number of common shares to be used in computing earnings per common share for 2008 on the 2008 comparative income statement. 11718000 shares E16-14 On January 1, 2008, Wilke Corp. had 480,000 shares of common stock outstanding. During 2008, it had the following transactions that affected the common stock account. Instructions (a) Determine the weighted average number of shares outstanding as of December 31, 2008. 1762000 shares (b) Assume that Wilke Corp. earned net income of $3,456,000 during 2008. In addition, it had 100,000 shares of 9%, $100 par nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2008. Compute earnings per share for 2008, using the weighted-average number of shares determined in part (a). (Round to 2 decimal places.) $ 1.96 (c) Assume the same facts as in part (b), except that the preferred stock was cumulative. Compute earnings per share for 2008. (Round to 2 decimal places.) $ 1.45 (d) Assume the same facts as in part (b), except that net income included an extraordinary gain of $864,000 and a loss from discontinued operations of $432,000. Both items are net of applicable income taxes. Compute earnings per share for 2008. (Round to 2 decimal places.) $ 1.96 AE16-15 Ace Company had 213,000 shares of common stock outstanding on December 31, 2008. During the year 2009 the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For the year 2009 Ace Company reported net income of $249,690 after a casualty loss of $41,200 (net of tax). Instructions What earnings per share data should be reported at the bottom of its income statement, assuming that the casualty loss is extraordinary? (Round final answers to 2 decimal places. Be sure to use leading zeros in your answer, for example, .783 should be 0.78.) AE16-19 At January 1, 2008, Langley Company's outstanding shares included the following. Net income for 2008 was $3,030,000. No cash dividends were declared or paid during 2008. On February 15, 2009, however, all preferred dividends in arrears were paid, together with a 5% stock dividend on common shares. There were no dividends in arrears prior to 2008. On April 1, 2008, 450,000 shares of common stock were sold for $10 per share, and on October 1, 2008, 110,000 shares of common stock were purchased for $20 per share and held as treasury stock. Instructions Compute earnings per share for 2008. Assume that financial statements for 2008 were issued in March 2009. (Round answer to 2 decimal places.) $ 1.61 E16-20 AE16-22 The Simon Corporation issued 10-year, $5,600,000 par, 7% callable convertible subordinated debentures on January 2, 2007. 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 98. Bond discount is amortized on a straight-line basis. Simon's effective tax was 35%. Net income in 2007 was $9,500,000, and the company had 2,000,000 shares outstanding during the entire year. Instructions Complete the schedule to compute both basic and diluted earnings per share. (Round answers to 2 decimal places.) Basic Earnings per share $ 4.75 Diluted Earnings per share $ 4.65 P16-6 1. Number of common shares issued and outstanding at December 31, 2005 2,700,000 2. Shares issued as a result of a 17% stock dividend on September 30, 2006 459,000 3. Shares issued for cash on March 31, 2007 2,700,000 Number of common shares issued and outstanding at December31, 2007 5,859,000 4. A 2-for-1 stock split of Newton's common stock took place on March 31, 2008 February 1 Issued 120,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 100,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 60,000 shares of treasury stock Income per share before extraordinary item $ 1.35 Extraordinary loss per share, net of tax ( 0.19 ) Net Income per share $ 1.16 280,000 shares of $50 par value, 7% cumulative preferred stock 900,000 shares of $1 par value common stock Net income for year $ 9,500,000 Add: Adjustment for interest (net of tax) 262,080 $ 9,762,080 *Maturity value $ 5,600,000 Stated rate X 7% Cash interest 392,000 Discount amortization 11,200 Interest expense 403,200 Tax rate X 65 % After tax interest $ 262,080
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