At the beginning of Year 1, Mike Co. had 100,000 shares of $1 par-value common stock...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
At the beginning of Year 1, Mike Co. had 100,000 shares of $1 par-value common stock outstanding. Mike's Year 1 net income before the effects of the independent transactions described below was $350,000. For each transaction, select from the option lists provided the appropriate effect, if any, on Mike's Year 1 basic earnings per share (BEPS). For the diluted earnings per share (DEPS), indicate whether it is lower, greater, or equal to the BEPS amount in Year 1. Each choice may be used once, more than once, or not at all. Do not leave any box empty; all the boxes must be filled. Assume that Mike is required to report both BEPS and DEPS. Transaction A. On March 1, Year 1, Mike issued 20,000 new shares of common stock. B. On January 1, Year 1, Mike issued to its employees call options to purchase 10,000 shares of Mike's common stock at $14 per share. No options were exercised during Year 1. The Year 1 average market price per share of Mike's common stock was $12. C. On January 1, Year 1, Mike issued 10,000 shares of $100 par, 5% cumulative convertible preferred stock. The conversion ratio is 1 share of preferred stock to 1 share of common stock. Mike did not declare preferred dividends in Year 1. No conversion of preferred stock occurred in Year 1. D. On September 1, Year 1, Mike repurchased 20,000 shares of its common stock for $500,000. Mike accounts for treasury stock using the cost method. BEPS BE E E !!!! DEPS = !!! !!! At the beginning of Year 1, Mike Co. had 100,000 shares of $1 par-value common stock outstanding. Mike's Year 1 net income before the effects of the independent transactions described below was $350,000. For each transaction, select from the option lists provided the appropriate effect, if any, on Mike's Year 1 basic earnings per share (BEPS). For the diluted earnings per share (DEPS), indicate whether it is lower, greater, or equal to the BEPS amount in Year 1. Each choice may be used once, more than once, or not at all. Do not leave any box empty; all the boxes must be filled. Assume that Mike is required to report both BEPS and DEPS. Transaction A. On March 1, Year 1, Mike issued 20,000 new shares of common stock. B. On January 1, Year 1, Mike issued to its employees call options to purchase 10,000 shares of Mike's common stock at $14 per share. No options were exercised during Year 1. The Year 1 average market price per share of Mike's common stock was $12. C. On January 1, Year 1, Mike issued 10,000 shares of $100 par, 5% cumulative convertible preferred stock. The conversion ratio is 1 share of preferred stock to 1 share of common stock. Mike did not declare preferred dividends in Year 1. No conversion of preferred stock occurred in Year 1. D. On September 1, Year 1, Mike repurchased 20,000 shares of its common stock for $500,000. Mike accounts for treasury stock using the cost method. BEPS BE E E !!!! DEPS = !!! !!!
Expert Answer:
Answer rating: 100% (QA)
Effects on Mikes Year 1 Earnings per Share Transaction BEPS DEPS A Issued 20000 new shares Decrease ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
"I'm not sure we should lay out $300,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $84,000 for...
-
List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...
-
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 %u2013$ 39,200,000 1 63,200,000 2 %u2013 12,200,000 a-1 What is the NPV for the...
-
What is UML and what is it used for? Elaborate on the word corresponding to the "M."
-
A company will pay an annual dividend, the first to be paid in exactly 8 years.The first dividend will be $3, and this will grow by 2% per year, forever.Investors require a 10% annual return. a) What...
-
Prepare the current assets section of the balance sheet as of December 31,2010, for Lipton, Inc., using the following information: Accounts Receivable. Petty Cash.. Cash in Bank Accounts Inventory......
-
Mino Inc. manufactures chocolate syrup in three departments: Cooking, Mixing, and Bottling. Mino uses the weighted average method. The following are cost and production data for the cooking...
-
An Asset required an initial investment of $14,705 and is expected to generate $5,000 in net cash flows in each year of its 3-yr. life. Step 1: Compute the present value factor for the investment...
-
Go to the home page of CoolHunters (www.thecoolhunter.net). Look at examples posted in the store subpage (under the design tab). How can this information of latest trends assist with store layout,...
-
Able Fastners Co. has a balance in its Accounts Receivable general ledger control count of $ 10,000 on January 1, 2019. The subsidiary ledger contains three vendor Accounts: Jones Company, balance of...
-
You need to borrow $10,000,000 on your line of credit to cover increased working capital expense due to sales growth. Bank A is willing to lend to you at 5.25% with 10% compensating balances. Bank B...
-
According to this excerpt, "Proponents of judicial elections argue that this method of selection is the most democratic, allowing the people to have a direct voice in selecting judges. They believe...
-
An vN-M expected-utility maximizing consumer has a house worth $200,000. She is confronted with a 5% chance of losing 80% of its value in a flood. Her Bernoulli utility function is of the form u(Y) =...
-
Benjamin Hall, an assistant Vice President at Fundamental Products, was disturbed to find on his desk a memo from his boss, Amal Viola, to the controller of the company. The memo appears below:...
-
The following are historical demand data: ACTUAL YEAR SEASON DEMAND 2011 Spring 207 Summer 141 Fall 365 Winter 572 2012 Spring 468 Summer 280 Fall 680 Winter 973 Use regression analysis on...
-
Question 2 (1 point) Workers training in standard operating procedures and WHMIS are forms of: Administrative control. PPE Housekeeping control. Work practice control.
-
An annual report of The Campbell Soup Company reported on its income statement $2.4 million as equity in earnings of affiliates. Journalize the entry that Campbell would have made to record this...
-
What is a bond? Define face value, maturity date, contract rate, bond certificate, and bond indenture.
-
The Palmquist Company has five different inventory items that it values by the lower of cost or market method. The normal markup on all items is 20% of cost. The following information is obtained...
-
The following 2007 information is available for the Stewart Company: Partial additional information: 1. The equipment that was sold for cash had cost $400 and had a book value of $300. 2. Land that...
-
The inversion point of a gas can be mathematically expressed as (a) \(T_{i}=\frac{2 a b}{R}\) (b) \(T_{i}=\frac{2 b}{R a}\) (c) \(T_{i}=\frac{2 a}{R b}\) (d) None of these.
-
Residual free energy is defined as (a) \(G^{R}=G-G^{\mathrm{ig}}\) (b) \(G^{R}=G^{\mathrm{ig}}-G\) (c) \(G^{R}=G+G^{\mathrm{ig}}\) (d) None of these.
-
Departure functions are useful to calculate the thermodynamic property of real fluids (a) When the \(P-V-T\) data of the substance is unavailable (b) When the \(P-V-T\) data of the substance is...
Study smarter with the SolutionInn App