Exercise $10-16($Algo$)$ Effect of Convertible Preferred Stock on Earnings per Share LO $10-4$

Pagle Corporation holds $80$ percent of Standard Company's common shares. The companies report the following

balance sheet data for December $31,20$X$1$:

An $8$ percent annual dividend is paid on the Pagle preferred stock and a $12$ percent dividend is paid on the

Standard preferred stock. Pagle's preferred shares are not convertible. Standard's preferred shares can be

converted into $15,000$ shares of common stock at any time. For $201,$ Standard reports $$54,000$ of net income and

pays total dividends of $$27,000,$ and Pagle reports $$67,000$ of income from its separate operations and pays total

dividends of $$41,000.$

Required:

Compute basic and diluted EPS for the consolidated entity for $20$X$1.$

Note: Round your answers to $2$ decimal places.

Answer is complete but not entirely correct. Pagle Corporation holds $80$ percent of Standard Company$$s common shares. The companies report the following balance sheet data for December $31,20$X$1$:

Pagle Corporation Standard Company

Assets

Cash $ $56,000$ $ $46,000$

Accounts Receivable $88,00068,000$

Inventory $122,00072,000$

Buildings and Equipment $740,000320,000$

Less: Accumulated Depreciation $(295,000)(150,000)$

Investment in Standard Company Stock $144,000$

Total Assets $ $855,000$ $ $356,000$

Liabilities and Owners$$ Equity

Accounts Payable $ $203,000$ $ $76,000$

Taxes Payable $72,000$

Preferred Stock $($$$10$ par value$)200,000100,000$

Common Stock:

$$10$ par value $100,000$

$$5$ par value $50,000$

Retained Earnings $280,000130,000$

Total Liabilities and Owners$$ Equity $ $855,000$ $ $356,000$

An $8$ percent annual dividend is paid on the Pagle preferred stock and a $12$ percent dividend is paid on the Standard preferred stock. Pagle's preferred shares are not convertible. Standard$$s preferred shares can be converted into $15,000$ shares of common stock at any time. For $20$X$1,$ Standard reports $$54,000$ of net income and pays total dividends of $$27,000,$ and Pagle reports $$67,000$ of income from its separate operations and pays total dividends of $$41,000.$

Required:

Compute basic and diluted EPS for the consolidated entity for $20$X$1.$

Note: Round your answers to $2$ decimal places.