Atlas, Inc., has the following capital structure at January 1, 2011. Outstanding Common stock , $10 par
Question:
Atlas, Inc., has the following capital structure at January 1, 2011.
Outstanding
Common stock, $10 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000shares 11% stated interest rate convertible bonds issued at par;
each $1,000 bond is convertible into 80 shares of common stock . . . . . . . . . . .. $5,000,000
During 2011, Atlas had the following stock transactions:
May 1 Issued 50,000 shares of common stock for $30 per share.
Aug. 1 Purchased 100,000 shares of treasury stock at $35 per share.
Oct. 1 Converted $2,000,000 of bonds.
Net income for 2011 was $950,000. The income tax rate was 30%. Compute basic and diluted EPS for Atlas for 2011.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
Step by Step Answer:
Rounded Diluted EPS Test convertible bonds for dilution 1000 011 07080 096 Since 096 is less than 11...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
