Jerry Ltd., a publicly listed company, needs to determine its earnings per share (EPS) information for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Jerry Ltd., a publicly listed company, needs to determine its earnings per share (EPS) information for its current year ended December 31. The following information is available to aid in the calculations: At the beginning of the year, the following shares were outstanding: 700,000 common shares 150,000 $6 cumulative convertible preferred shares 200,000 $3 non-cumulative preferred shares On September 30, Jerry issued 120,000 common shares for $2,100,000. Jerry had after-tax earnings of $3,200,000 for the year and declared $1,200,000 of preferred dividends during the year ($900,000 to the cumulative preferred shareholders and $300,000 to the non-cumulative preferred shareholders). The cumulative preferred shares are convertible at the option of the holder into two common shares per preferred share. Jerry had stock options outstanding that allow holders to purchase 100,000 common shares at an exercise price of $12. The average market price of common shares during the year was $18. On January 1 Jerry had $5,000,000 face value 8% convertible bonds outstanding originally issued at par. Interest is payable annually on December 31. Each $1,000 worth of bonds is convertible into 50 common shares at the option of the holder. All bonds remain unconverted on December 31. The tax rate for the company is 30%. Required: a) Compute the basic EPS figures that should be disclosed by Jerry in its current year financial statements for the year ended December 31. b) Compute the diluted EPS figures that should be disclosed by Jerry in its current year financial statements for the year ended December 31. Jerry Ltd., a publicly listed company, needs to determine its earnings per share (EPS) information for its current year ended December 31. The following information is available to aid in the calculations: At the beginning of the year, the following shares were outstanding: 700,000 common shares 150,000 $6 cumulative convertible preferred shares 200,000 $3 non-cumulative preferred shares On September 30, Jerry issued 120,000 common shares for $2,100,000. Jerry had after-tax earnings of $3,200,000 for the year and declared $1,200,000 of preferred dividends during the year ($900,000 to the cumulative preferred shareholders and $300,000 to the non-cumulative preferred shareholders). The cumulative preferred shares are convertible at the option of the holder into two common shares per preferred share. Jerry had stock options outstanding that allow holders to purchase 100,000 common shares at an exercise price of $12. The average market price of common shares during the year was $18. On January 1 Jerry had $5,000,000 face value 8% convertible bonds outstanding originally issued at par. Interest is payable annually on December 31. Each $1,000 worth of bonds is convertible into 50 common shares at the option of the holder. All bonds remain unconverted on December 31. The tax rate for the company is 30%. Required: a) Compute the basic EPS figures that should be disclosed by Jerry in its current year financial statements for the year ended December 31. b) Compute the diluted EPS figures that should be disclosed by Jerry in its current year financial statements for the year ended December 31.
Expert Answer:
Answer rating: 100% (QA)
Answer a To compute the basic EPS figures we need to determine the weighted average number of common shares outstanding during the year Step 1 Calcula... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these finance questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Formulas Current Ratio = Current Assets / Current Liabilities Debt-to-assets ratio = Total Liabilities / Total Assets Asset turnover ratio = Net Sales Revenue / Average Total Assets Net profit...
-
= Adobe Reader Touch Type here to search Active Research: Toyota's Hybrid Offer One of the most successful hybrid cars (cars that run on both battery and gasoline) is the Prius by Toyota. Visit...
-
If an interest rate of 6.9% compounded semi- annually is charged on a car loan, what effective rate of interest should be disclosed to the borrower?
-
What are the benefits of being able to compare the amount of defects in a human resource process with those of collection or billing?
-
The following data apply to each of four different populations: Required: a. Compute the planned beta risk for each population. b. Calculate the precision to be used in determining sample size for...
-
Keegan Corporations accounting records disclosed the following information for 2016: Cash sales ......................$850,000 Net credit sales .................... 720,000 Accounts receivable...
-
Some people (James Tobin was one) think that financial market transactions should be taxed. What are the arguments for and against? Would that somehow make the world a better place? Or would it just...
-
All electric devices are required to have identifying plates that specify their electrical characteristics. The plate on a certain steam iron states that the iron carries a current of 6.00 A when...
-
Imagine you are a manager tasked with writing a proposal to implement a new employee wellness program in your company. Write a sample email to your CEO outlining the benefits of the program, the...
-
10 cumecs of water is delivered to a 32 ha field for 4 hr. Calculate water application efficiency, if the depth of water stored in the root zone is 0.3 m.
-
Calculate the temporary, permanent, and total hardness of water in ppm having the following composition. Ca(HCO3)2=4ppm, Mg(HCO3)2 = 6 ppm, CaSO4 = 8ppm, MgSO4 = 10 ppm and Na HCO3=3 ppm?
-
Explain the meaning and importance of the following in fish stock assessment: i. MSY BMSY FMSY
-
What is a regressive tax? explain in detail with example
-
Read the case "Boeing's High-Flying Approach to HR Planning & Recruitment" and answer the following questions: 1. To meet labor shortages within the company, Boeing starts with promotions and...
-
The domain of the variable in the expression x 3/x + 4 is________.
-
Draw the shear and moment diagrams for the shaft, and determine its required diameter to the nearest \(\frac{1}{4} \mathrm{in}\). if \(\sigma_{\text {allow }}=7 \mathrm{ksi}\) and \(\tau_{\text...
-
Determine the maximum uniform loading \(w\) the \(\mathrm{W} 12 \times 14\) beam will support if the allowable bending stress is \(\sigma_{\text {allow }}=22 \mathrm{ksi}\) and the allowable shear...
-
Determine if the \(\mathrm{W} 14 \times 22\) beam will safely support a loading of \(w=1.5 \mathrm{kip} / \mathrm{ft}\). The allowable bending stress is \(\sigma_{\text {allow }}=22 \mathrm{ksi}\)...
Study smarter with the SolutionInn App