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ABC Co for 2012:




Question;1.The following applies to the ABC Co for 2012:Transactions in Common Shares1/1/12, Beginning Outstanding Shares4/1/12, Stock buyback6/1/12, Stock Split 2-for-110/1/12, Issuance of Additional SharesChangeSharesOutstanding(90,000)4,910,000200,0005,000,0004,910,0009,820,00010,020,000Outstanding Stock Options (Granted in 2010)Options for 90,000 shares exercisable at the option price of $35 per share. Average 2012market price was $50 per share. (Market price and option price already adjusted for stocksplit).Convertible Bonds (Issued December 1, 2012)$10 million of 3% bonds convertible to shares of common stock. Each $1,000 bondconverts to 80 shares of common.Net income in 2012 was $2,200,000. ABC?s tax rate is 40%A) Compute the basic earnings per share for 2012.B) Compute the diluted earnings per share for 2012.2.On September 1, 2012, The XYZ Co. issues $5,000,000 of bonds having a coupon rate of8%. To help the sale, detachable stock warrants are issued at the rate of five warrants foreach $1,000 bond sold. The fair market value of the warrants is $5 each. The bonds withthe warrants sold at 104 plus accrued interest. Interest is payable on November 1st andMay 1st. (Assume a 360 day year, i.e., 30-day months.)Prepare the 9/1/12 entry for this transaction.


Paper#51246 | Written in 18-Jul-2015

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