BEPS & DEPS? Chon Corporation has the following information regarding its capital structure for the current year:

BEPS & DEPS?

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Chon Corporation has the following information regarding its capital structure for the current year: Common stock, 360,000 shares issued and outstanding as of the start of the year. On July 1, an additional 200,000 shares were issued which was followed by a 50% stock dividend declaration on July 8th. 240,000 Additional shares were sold on September 1, While on October 1st, the company reacquired 60,000 shares in the open market to be held as treasury shares. The company has 8% $100 par value cumulative preferred stock issued at par. It is reported on the balance sheet at $200,000. In addition, there is 6% $100 par value convertible cumulative preferred stock issued at $105 and convertible into a total of 20,000 shares of common stock. It has a value of $400,000 reported on the balance sheet. There is also APIC in the amount of $20,000. The company also has convertible bonds outstanding that carry a 6% interest rate. The face amount of the bonds is $500,000 and they are convertible into 25,000 shares of common stock. Additional information: All preferred stock dividends are one year in arrears. Stock options for 120,000 shares are outstanding at an exercise price of $25. The net income for the year is $640,000 and the company is subject to a 40% tax rate. No options were exercised and no actual conversions occurred during the year. The stock's year end price was $36 while it averaged $32 during the year. Chon Corporation has the following information regarding its capital structure for the current year: Common stock, 360,000 shares issued and outstanding as of the start of the year. On July 1, an additional 200,000 shares were issued which was followed by a 50% stock dividend declaration on July 8th. 240,000 Additional shares were sold on September 1, While on October 1st, the company reacquired 60,000 shares in the open market to be held as treasury shares. The company has 8% $100 par value cumulative preferred stock issued at par. It is reported on the balance sheet at $200,000. In addition, there is 6% $100 par value convertible cumulative preferred stock issued at $105 and convertible into a total of 20,000 shares of common stock. It has a value of $400,000 reported on the balance sheet. There is also APIC in the amount of $20,000. The company also has convertible bonds outstanding that carry a 6% interest rate. The face amount of the bonds is $500,000 and they are convertible into 25,000 shares of common stock. Additional information: All preferred stock dividends are one year in arrears. Stock options for 120,000 shares are outstanding at an exercise price of $25. The net income for the year is $640,000 and the company is subject to a 40% tax rate. No options were exercised and no actual conversions occurred during the year. The stock's year end price was $36 while it averaged $32 during the year.

Answer rating: 100% (QA)

ANSWER B EPS 640 000 x 40 256 000 D EPS 640 000 256 000 384 000 EX PL AN ATION Basic EPS is simply a ... View the full answer