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
-
1- Select at least ONE of these topics (you may select more if you wish), and do ONE of the following: If you are unclear on something, try to explain what you are unclear about and ask for...
-
"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...
-
Find a 2 ( 2 non-diagonal matrix whose eigenvalues are 2 and -3, and associated eigenvectors are And Respectively? 2.
-
D. Figure below presents the spot yield curves for different scenarios. Please use it to answer parts C and 2.1 0 Scenario 1 T T T T 1 2 3 5 6 7 Maturity 10 Scenario 3 .2 1 3. * .3 2 1 0 T 2 Scenario...
-
Explain why infinite dilution Fickian diffusivities for binary liquid systems are not equal, \(D_{\mathrm{AB}}^{\circ} eq D_{\mathrm{BA}}^{\circ}\)
-
Define X as the number of under filled bottles from a filling operation in a carton of 24 bottles. Sixty cartons are inspected and the following observations on X are recorded: Values 0 1 2 3...
-
You are worried about the risk posed by potentially destructive riots that might effect your $ 6 million government data center located in a large city in Pacific Northwest part of the United States....
-
Alanco, Inc. manufactures a variety of products and is currently manufacturing all of its own component parts. An outside supplier has offered to sell one of those components to Alanco. The...
-
The supplier Zamatia agrees to buy back any leftover inventory at the price of $40 per unit, which is higher than the salvage value of $25. In this case, the retailer UV earns 115-75 = $40 for each...
-
A production performance report for J Corporation is shown below: Flexible Budget Production in Units Budget 50,000 units Actual 44,000 units Variance Direct materials $100,000 $ 90,000 $10,000 F...
-
We obtain monthly data on retail sales of supermarket and grocery stores in Victoria measured in millions of Australian dollars from January 2010 to January 2021 and the data are plotted in the...
-
7. A tornado siren has a sound intensity level of 88 dB at a distance of 500 m. A. What is the sound intensity at this distance, in W/m? B. A human eardrum has an approximate area of 0.5 cm = 5.0...
-
How do power dynamics and privilege manifest within organizational structures, and what measures can be implemented to redistribute power and promote equitable opportunities for all employees?
-
5. Natasha enjoys Flying (F) and taking Judo (J). For every flight she buys, she gets three times as much enjoyment as a Judo class. (15 points) (a) Write down a utility function that represents...
-
Marketing analytics is the fastest growing area of marketing research. How do you think marketing analytic firms help organizations? Explain
-
According during to the IRS, individuals filing federal income tax returns prior to March 31 received an average refund of $1,088 in 2018. Consider the population of "last-minute" filers who mail...
-
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...
-
Kipling Manufacturing, Inc., operates a plant that produces its own regionally marketed Super Salad Dressing. The dressing is produced in two processes, blending and bottling. In the Blending...
-
Kipper Company processes a scouring powder through its Compounding Department and Packaging Department. In the Compounding Department, direct materials are added at the beginning of the process, and...
-
Chauncer Manufacturing Corporation produces a dandruff shampoo in three consecutive processes. The costs of Department 1 for June 2019 were as follows: Department 1 handled the following units during...
Study smarter with the SolutionInn App