Exam 18: Earnings Per Share

On December 31,2014,Luanne Inc.had outstanding 180,000 shares of common stock.Net income for 2014 was $285,000.Outstanding options (granted July 1,2014)to purchase 15,000 shares of common stock at $20 per share had not been exercised by December 31,2014.During 2014,market prices for Luanne's common stock were:

Assume a company had net income of $20,000 and 8,000 shares of common stock outstanding the entire year.Also assume there were two potentially dilutive issues outstanding for the entire year: What is diluted earnings per share for this company for the year?

For companies with a complex capital structure,a convertible security is potentially dilutive if its incremental EPS is

Azul Incorporated has 3,500,000 shares of common stock outstanding on December 31,2013.An additional 400,000 shares of common stock were issued April 1,2014,and 150,000 more on July 1,2014.On October 1,2014,Azul issued 5,000,$1,000 face value,7 percent convertible bonds.Each bond is convertible into 40 shares of common stock.No bonds were converted into common stock in 2014.What is the number of shares to be used in computing basic earnings per share and diluted earnings per share,respectively?

A company earned $20,000 in 2014 and had 20,000 shares of common stock outstanding the entire year.The following four potentially dilutive securities were also outstanding for the entire year.The numerator and denominator effects of the issues are as indicated: What is diluted EPS?

The following is a partial balance sheet for Adherance Corp.for the year ended December 31,2013:

When using the if-converted method to compute diluted earnings per share,convertible securities should be

During 2014,the Laverne Corporation had 370,000 shares of $20 par common stock outstanding.On January 1,2014,2,000,8 percent bonds were issued with a maturity value of $1,000 each.To enhance the bond sale,the company offered a conversion of 50 shares of common stock for each bond at the option of the purchaser.Net income for 2014 was $464,000.The income tax rate was 30 percent.Compute the diluted earnings per share of common stock.

Which earnings per share computation should be reported on the face of the income statement? Basic EPS Diluted EPS

At December 31,2013,Rightoff,Inc.had 600,000 shares of common stock outstanding.On April 1,2014,an additional 180,000 shares of common stock were issued for cash.Rightoff also had $5,000,000 of 8% convertible bonds outstanding at December 31,2013,which are convertible into 150,000 shares of common stock.The bonds are dilutive in the 2014 EPS computation.No bonds were issued or converted into common stock during 2014. -Using the information above,what is the number of shares that should be used in computing basic earnings per share for 2014?

The Simonson Corp.provides the following data for 2014: The net income for 2014 is $2,300,000.The Simonson's tax rate is 30 percent.No conversions or options were exercised during 2014.

When computing earnings per share on common stock,dividends on cumulative,nonconvertible preferred stock should be

At December 31,2013,Nightstyle Inc.had 190,000 shares of common stock outstanding.On October 1,2014,an additional 70,000 shares of common stock were issued for cash.Nightstyle also had 2,000,000 of 8 percent convertible bonds outstanding at December 31,2014,which are convertible into 55,000 shares of common stock.The bonds are dilutive in the 2014 earnings per share computation.No bonds were issued or converted into common stock during 2014.What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31,2014?

Under current GAAP,a company with a complex capital structure and potential earnings per share dilution must present

During 2014,Belladonna Corp.had outstanding 125,000 shares of common stock and 7,500 shares of noncumulative,8 percent,$50 par preferred stock.Each preferred share is convertible into 8 shares of common stock.In 2014,net income was $231,500.

Overland,Inc.had 150,000 shares of common stock issued and outstanding at December 31,2013.On July 1,2014,an additional 25,000 shares of common stock were issued for cash.Overland also had unexercised stock options to purchase 20,000 shares of common stock at $15 per share outstanding at the beginning and end of 2014.The market price of Overland's common stock was $20 throughout 2014.What number of shares should be used in computing diluted earnings per share for the year ended December 31,2014?

At December 31,2014 and 2013,Rollins Corp.had 200,000 shares of common stock and 20,000 shares of 5 percent,$100 par value cumulative preferred stock outstanding.No dividends were declared on either the preferred or common stock in 2013 or 2014.Net income for 2014 was $1,000,000.For 2014,basic earnings per common share amounted to

On December 31,2013,Freulein Company had 8,000 shares of common stock issued and outstanding.On April 1,2014,an additional 1,500 shares of common stock were issued and on July 1,500 more shares were issued.On October 1,2014,Freulein issued 10,$1,000 maturity value,8% convertible bonds.Each bond is convertible into 40 shares of common stock.No bonds were converted into common stock in 2014.Assuming there are no antidilutive securities,what is the number of shares Freulein should use to compute diluted earnings per share for the year ended December 31,2014?

Where in the financial statements should basic and complex EPS figures for income from continuing operations be reported?

On January 2,2014,Wondrous Co.issued at par $50,000 of 4 percent bonds convertible,in total,into 5,000 shares of Wondrous's common stock.No bonds were converted during 2014.Throughout 2014 Wondrous had 5,000 shares of common stock outstanding.Wondrous' 2014 net income was $5,000.Wondrous' income tax rate is 40 percent.No potentially dilutive securities other than the convertible bonds were outstanding during 2014.Wondrous' diluted earnings per share for 2014 would be