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On January 1, 2012, Bailey Industries had stock outstanding as follows. 6% Cumulative preferredstock

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Question;On January 1, 2012, Bailey Industries had stock outstanding;as follows.;6% Cumulative preferred stock, $100 par value, issued and;outstanding 10,000 shares $1,000,000;Common stock, $10 par value, issued and outstanding 200,000;shares 2,000,000;To acquire the net assets of three smaller companies, Bailey;authorized the issuance of an additional 170,000 common shares. The;acquisitions took place as shown below.;Date of Acquisition Shares;Issued;Company A April 1, 2012 60,000;Company B July 1, 2012 80,000;Company C October 1, 2012 30,000;On May 14, 2012, Bailey realized a $90,000 (before taxes);insurance gain on the expropriation of investments originally purchased in;2000.;On December 31, 2012, Bailey recorded net income of $300,000;before tax and exclusive of the gain.;Instructions;Assuming a 40% tax rate, compute the earnings per share data;that should appear on the financial statements of Bailey Industries as of;December 31, 2012. Assume that the expropriation is extraordinary.;P16.7.;(computation of Basic and Diluted Eps);7;Charles Austin of the controller's office of Thompson;Corporation was given the assignment of determining the basic and;dilutedearnings per share values for the year ending December 31, 2013. Austin;has compiled the information listed below.;1. The company is authorized to issue 8,000,000 shares of;$10 par value common stock. As of December 31, 2012, 2,000,000 shares had been;issued and were outstanding.;2. The per sharemarket prices of the common stock on;selected dates were as follows.;Price per Share;July 1, 2012 $20.00;January 1, 2013 21.00;April 1, 2013 25.00;July 1, 2013 11.00;August 1, 2013 10.50;November 1, 2013 9.00;December 31, 2013 10.00;3. A total of 700,000 shares of an authorized 1,200,000;shares of convertible preferred stock had been issued on July 1, 2012. The;stock was issued at its par value of $25, and it has a cumulative dividend of;$3 per share. The stock is convertible into common stock at the rate of one;share of convertible preferred for oneshare of common. The rate of conversion;is to be automatically adjusted for stock splits and stockdividends. Dividends;are paid quarterly on September 30, December 31, March 31, and June 30.;4. Thompson Corporation is subject to a 40% income tax rate.;5. The after-tax net income for the year ended December 31;2013, was $11,550,000.;The following specific activities took place during 2013.;1. January 1?A 5% commonstockdividend was issued. The;dividend had been declared on December 1, 2012, to all stockholders of record;on December 29, 2012.;2. April 1?A total of 400,000 shares of the $3 convertible;preferred stock was converted into common stock. The company issued new common;stock and retired the preferred stock. This was the only conversion of the preferred;stock during 2013.;3. July 1?A 2-for-1 split of the common stock became;effective on this date. The board of directors had authorized the split on June;1.;4. August 1?A total of 300,000 shares of common stock were;issued to acquire a factory building.;5. November 1?A total of 24,000 shares of common stock were;purchased on the openmarket at $9 per share. These shares were to be held as;treasury stock and were still in the treasury as of December 31, 2013.;6. Common stock cash dividends?Cash dividends to common;stockholders were declared and paid as follows.;April 15?$0.30 per share;October 15?$0.20 per share;7. Preferred stock cash dividends?Cash dividends to;preferred stockholders were declared and paid as scheduled.;Instructions;(a) Determine the number of shares used to compute basic;earnings per share for the year ended December 31, 2013.;(b) Determine the number of shares used to compute diluted;earnings per share for the year ended December 31, 2013.;(c) Compute the adjusted net income to be used as the;numerator in the basicearnings per share calculation for the year ended;December 31, 2013.

 

Paper#44300 | Written in 18-Jul-2015

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