Chrissy Corporation had the following securities outstanding at its fiscal year end December 31, 20X7: 1....

  

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Chrissy Corporation had the following securities outstanding at its fiscal year end December 31, 20X7: 1. 200,000 Options: $11 exercise price; each option allows for the purchase of one share 2. Common Shares, no par; authorized 5,000,000 shares; issued and outstanding 600,000 shares 3. 7.5% Convertible Bonds, par value $2,500,000. The bonds were issued this year on May 1, 20X7. 4. Preferred Shares, cumulative, convertible, $1.25 dividend per quarter, no- par. Authorization limit 100,000; issued and outstanding 25,000 shares. Issued this year on October 1, 20X7. Other Information for 20X7: a) Options were outstanding all year to purchase 200,000 common shares at $11 per share b) 20X7 net earnings were $790,000. c) Interest expense was $216,000 on the 6% bonds. d) The preferred shares are convertible into common shares at a rate of 9 common shares for 1 preferred share. e) The 7.5% convertible bonds are convertible at a rate of seven shares for each $100 bond. f) The tax rate is 35% g) Common shares traded for an average of $32 during the year. h) No dividends were declared in 20X7. DNo common shares were issued or retired during the year. NOTE: round all dollars to two decimal places. Round all share amounts to the nearest whole share NOTE: round all dollars to two decimal places. Round all share amounts to the nearest whole share Required: 1. Calculate basic EPS for the 2017 year. 2. Test each security for dilution and identify each as dilutive or anti-dilutive. If options are dilutive, show the calculation of new shares issued. SHOW ALL CALCULATIONS 3. Prepare a cascade worksheet to show the catculation of diluted EPS, beginning with basic EPS. Chrissy Corporation had the following securities outstanding at its fiscal year end December 31, 20X7: 1. 200,000 Options: $11 exercise price; each option allows for the purchase of one share 2. Common Shares, no par; authorized 5,000,000 shares; issued and outstanding 600,000 shares 3. 7.5% Convertible Bonds, par value $2,500,000. The bonds were issued this year on May 1, 20X7. 4. Preferred Shares, cumulative, convertible, $1.25 dividend per quarter, no- par. Authorization limit 100,000; issued and outstanding 25,000 shares. Issued this year on October 1, 20X7. Other Information for 20X7: a) Options were outstanding all year to purchase 200,000 common shares at $11 per share b) 20X7 net earnings were $790,000. c) Interest expense was $216,000 on the 6% bonds. d) The preferred shares are convertible into common shares at a rate of 9 common shares for 1 preferred share. e) The 7.5% convertible bonds are convertible at a rate of seven shares for each $100 bond. f) The tax rate is 35% g) Common shares traded for an average of $32 during the year. h) No dividends were declared in 20X7. DNo common shares were issued or retired during the year. NOTE: round all dollars to two decimal places. Round all share amounts to the nearest whole share NOTE: round all dollars to two decimal places. Round all share amounts to the nearest whole share Required: 1. Calculate basic EPS for the 2017 year. 2. Test each security for dilution and identify each as dilutive or anti-dilutive. If options are dilutive, show the calculation of new shares issued. SHOW ALL CALCULATIONS 3. Prepare a cascade worksheet to show the catculation of diluted EPS, beginning with basic EPS.

Answer rating: 100% (QA)

1 Basic EPS Weighted avg of share 600000 Net Income 790000 Preferred dividends 25000125 31250 Earnin... View the full answer