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Question;Pr. 16-129?Convertible bonds and stock warrants.;For each of the unrelated transactions described;below, present the entry(ies) required to record the bond transactions.;1. On;August 1, 2007;Ryan Corporation called its 10% convertible bonds for conversion. The $8,000,000;par bonds were converted into 320,000 shares of $20 par common stock. On August;1, there was $700,000 of unamortized premium applicable to the bonds. The fair;market value of the common stock was $20 per share. Ignore all interest;payments.;2. Garnett;Inc. decides to issue convertible bonds instead of common stock. The company;issues 10% convertible bonds, par $3,000,000, at 97. The investment banker;indicates that if the bonds had not been convertible they would have sold at;94.;3. Lopez;Company issues $5,000,000 of bonds with a coupon rate of 8%. To help the sale;detachable stock warrants are issued at the rate of ten warrants for each;$1,000 bond sold. It is estimated that;the value of the bonds without the warrants is $4,935,000 and the value of the;warrants is $315,000. The bonds with the warrants sold at 101.;Pr. 16-130?Earnings per share.;Adcock Corp. had $500,000 net income in 2007.;On January 1, 2007;there were 200,000 shares of common stock outstanding. On April 1, 20,000;shares were issued and on September 1, Adcock bought 30,000 shares of treasury;stock. There are 30,000 options to buy common stock at $40 a share outstanding.;The market price of the common stock averaged $50 during 2007. The tax rate is;40%.;During 2007, there were 40,000 shares of;convertible preferred stock outstanding. The preferred is $100 par, pays $3.50;a year dividend, and is convertible into three shares of common stock.;Adcock issued $2,000,000 of 8% convertible bonds at;face value during 2006. Each $1,000 bond is convertible into 30 shares of;common stock.;Instructions;Compute diluted earnings per share for 2007.;Complete the schedule and show all computations.;Net Adjust- Adjusted Adjust- Adjusted;Security Income ment Net Income Shares ment Shares EPS;Pr. 16-131?Basic and diluted EPS.;Assume that;the following data relative to Eddy Company for 2007 is available;Net Income $2,100,000;Transactions in Common Shares Change Cumulative;Jan.;1, 2007;Beginning number 700,000;Mar.;1, 2007;Purchase of treasury shares (60,000) 640,000;June;1, 2007;Stock split 2-1 640,000 1,280,000;Nov.;1, 2007;Issuance of shares 120,000 1,400,000;8% Cumulative;Convertible Preferred Stock;Sold at par, convertible into 200,000 shares of;common;(adjusted for split). $1,000,000;Stock;Options;Exercisable at the option price of $25 per share.;Average;market price in 2007, $30 (market price and;option price;adjusted for split). 60,000;shares;Instructions;(a) Compute the basic earnings per;share for 2007. (Round to the nearest penny.);(b) Compute the diluted earnings;per share for 2007. (Round to the;nearest penny.);Pr. 16-132?Basic and diluted EPS.;Presented;below is information related to Berry Company.;1. Net;Income [including an extraordinary gain (net of tax) of $70,000] $230,000;2. Capital;Structure;a. Cumulative 8% preferred stock, $100 par;6,000;shares issued and outstanding $600,000;b. $10 par common stock, 74,000 shares;outstanding on January 1.;On;April 1, 40,000 shares were issued for cash.;On October 1;16,000;shares were purchased and retired. $1,000,000;c. On January 2 of the current year, Berry purchased Raye;Corporation.;One;of the terms of the purchase was that if Berry;s net income for the;following;year is $2400,000 or more, 50,000 additional shares would;be;issued to Raye stockholders next year.;3. Other;Information;a. Average market price per share of common;stock during entire year $30;b. Income tax rate 30%;Instructions;Compute;earnings per share for the current year.;Pr. 16-133?Basic and diluted EPS.;The following;information was taken from the books and records of Simonic, Inc.;1. Net income $ 280,000;2. Capital structure;a. Convertible 6% bonds. Each of the 300, $1,000;bonds is convertible;into;50 shares of common stock at the present date and for the next;10;years. 300,000;b. $10 par common stock, 200,000 shares issued;and outstanding;during;the entire year. 2,000,000;c. Stock warrants outstanding to buy 16,000;shares of common stock;at;$20 per share.;3. Other information;a. Bonds converted during the year None;b. Income tax rate 30%;c. Convertible debt was outstanding the entire;year;d. Average market price per share of common stock;during the year $32;e. Warrants were outstanding the entire year;f. Warrants exercised during the year None;Instructions;Compute basic and diluted earnings per share.


Paper#48751 | Written in 18-Jul-2015

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