The net income for Peanut Butter Jam for the year ended December 31, 2021 was $1,400,000....

 

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The net income for Peanut Butter Jam for the year ended December 31, 2021 was $1,400,000. Peanut Butter Jam had 30,000 ordinary shares outstanding at the beginning of the year. Peanut Butter Jam declared and distributed a 3-for-1 stock split on May 1,2021 and issued 40,000 ordinary shares on November 1, 2021. Select details of Peanut Butter Jam's liabilities and equities are as follows: Bonds A $1,400,000, 11%, 10-year, semi-annual bonds issued on July 1, 2021. At the option of the holder, each $1,000 bond can be converted into 20 ordinary shares at any time before expiry Bonds B $1,500,000, 9%, semi-annual bonds issued September 30, 2021. The owners of the bonds elect to convert them into 25,500 ordinary shares on December 1, 2021 . 50,000 cumulative preferred shares that are each entitled to dividends of $20.00 per annum. Dividends are not declared in 2021. Peanut Butter Jam's corporate tax rate was 30%. The recorded conversion factor for the convertible bonds has already been adjusted for the stock split. REQUIRED, Assuming that the effective rate of interest on the bonds equals the coupon rate: Prepare a schedule that sets out the income effect, share effect, and incremental EPS for each security that is convertible into ordinary shares. Rank the potential ordinary shares by their dilutiveness. NOTE: do NOT enter $ or commas (.) when entering your answers. Potential ordinary shares Income effect Bonds A Bonds B b) calculate dilutive eamings per share for 2021 for Peanut Butter Jam: NOTE: do NOT enter $ or commas (.) when entering your answers, Share effect Incremental EPS Rank Order The net income for Peanut Butter Jam for the year ended December 31, 2021 was $1,400,000. Peanut Butter Jam had 30,000 ordinary shares outstanding at the beginning of the year. Peanut Butter Jam declared and distributed a 3-for-1 stock split on May 1,2021 and issued 40,000 ordinary shares on November 1, 2021. Select details of Peanut Butter Jam's liabilities and equities are as follows: Bonds A $1,400,000, 11%, 10-year, semi-annual bonds issued on July 1, 2021. At the option of the holder, each $1,000 bond can be converted into 20 ordinary shares at any time before expiry Bonds B $1,500,000, 9%, semi-annual bonds issued September 30, 2021. The owners of the bonds elect to convert them into 25,500 ordinary shares on December 1, 2021 . 50,000 cumulative preferred shares that are each entitled to dividends of $20.00 per annum. Dividends are not declared in 2021. Peanut Butter Jam's corporate tax rate was 30%. The recorded conversion factor for the convertible bonds has already been adjusted for the stock split. REQUIRED, Assuming that the effective rate of interest on the bonds equals the coupon rate: Prepare a schedule that sets out the income effect, share effect, and incremental EPS for each security that is convertible into ordinary shares. Rank the potential ordinary shares by their dilutiveness. NOTE: do NOT enter $ or commas (.) when entering your answers. Potential ordinary shares Income effect Bonds A Bonds B b) calculate dilutive eamings per share for 2021 for Peanut Butter Jam: NOTE: do NOT enter $ or commas (.) when entering your answers, Share effect Incremental EPS Rank Order

Answer rating: 100% (QA)

Prepare a schedule that sets out the income effect share effect and incremental EPS for each securit... View the full answer