Question # 4

Basic and diluted earnings per share

Throughout the calendar year 2020, Kali Corporation has 400,000 common shares outstanding (no preferred shares issued). In addition, Collie has 5,000, 20-year, 7% bonds outstanding, issued at par in 2018. Each $ 1,000 bond is convertible into 20 common shares after June 30, 2021. Collie reported net income of $ 600,000 for calendar 2020. Their income tax rate is 30%.

Instructions

Calculate basic and diluted earnings per share for 2020.

Question # 5

On January 1, 2019, Hulk Ltd. reported the following balances relating to their defined benefit pension plan:

...... Defined benefit obligation............................................... $1,600,000

...... Fair value of plan assets............................................... 1,600,000

Other data related to the pension plan for calendar 2019 are:

...... Current service cost..................................................... 80,000

...... Contributions to the plan................................................ 120,000

...... Benefits paid.................................................................. 100,000

...... Actual return on plan assets......................................... 96,000

...... Interest (discount) rate.................................................. 10%

Instructions

a. Calculate pension expense for 2019.

b. Prepare the journal entries to record the pension expense and the contributions for 2019.