Exam 18: Earnings Per Share

At December 31,2013,Grandin Corporation had 500 shares of common stock outstanding.On October 1,2014,an additional 200 shares of common stock were issued.In addition,Grandin Corp.had $40,000 of 8 percent convertible bonds outstanding at December 31,2013,which are convertible into 225 shares of common stock.No bonds were converted into common stock in 2014.Net income for the year ending December 31,2014,was $14,000.Assuming the income tax rate was 50 percent,the diluted earnings per share for the year ended December 31,2014,should be

Moodrocker Company had 1,000 common shares issued and outstanding at January 1.During the year,Moodrocker also had the common stock transactions listed below. Given this information,what is the weighted-average number of shares that Moodrocker should use for earnings per share purposes?

On December 31,2012,Bugler Travel Inc.had 450,000 shares of no-par common stock issued and outstanding.All shares were sold for $7.50.On June 30,2013,Bugler issued an additional 135,000 shares for $7 per share.The 2013 income was $319,200.On September 1,2012,a 15 percent stock dividend was issued to all common shareholders.On October 1,2014,60,000 shares were reacquired as treasury shares.Net income in 2014 was $278,063.

Gabor Company had granted 20,000 options to buy one share of common stock at $10 per share to employees several years ago.The company had net income of $200,000 this year and had 300,000 shares of common stock outstanding the entire year.The average market price per share was $20 and the end of year price was $25.Given only the above information,what are basic and diluted earnings per share respectively for the year?

The main purpose of reporting diluted earnings per share is to

The EPS computation that is forward-looking and based on assumptions about future transactions is

Pueblo Corporation had 100 shares of common stock issued and outstanding at December 31,2013.On July 1,2014,Pueblo issued a 10 percent stock dividend.Unexercised stock options to purchase 20 shares of common stock (adjusted for the 2014 stock dividend)at $20 per share were outstanding at the beginning and end of 2014.The average market price of Pueblo's common stock (which was not affected by the stock dividend)was $25 per share during 2014.The ending market price was $40.Net income for the year ended December 31,2014,was $2,200. What was Pueblo's 2014 basic earnings per share,rounded to the nearest cent?

The following information applies to the next three questions: Tangier Corporation currently has stock rights outstanding for 2,000 common shares.The exercise price of these shares is $25.The options were issued in January of 2012.The average market price of the related common stock during the year 2012 was $30.The average market price of the related common stock during 2013 was $26 and during 2014 was $21.The company's fiscal year ends on December 31 of each year. -How should these stock rights be treated in the earnings per share calculation for the year ending December 31,2014?

In computing the earnings per share of common stock,noncumulative preferred dividends not declared should be

Carbondale Enterprises had 200,000 shares of common stock issued and outstanding at December 31,2013.On July 1,2014,Carbondale issued a 10 percent stock dividend.Unexercised stock options to purchase 40,000 shares of common stock (adjusted for the 2014 stock dividend)at $20 per share were outstanding at the beginning and end of 2014.The market price of Carbondale's common stock (which was not affected by the stock dividend)was $25 per share during 2014.Net income for the year ended December 31,2014,was $1,100,000.What should be Carbondale's 2014 diluted earnings per common share,rounded to the nearest penny?

The Neron Company's net income for the year ended December 31 was $30,000.During the year,Neron declared and paid $3,000 in cash dividends on preferred stock and $5,250 in cash dividends on common stock.At December 31,36,000 shares of common stock were outstanding,30,000 of which had been issued and outstanding throughout the year and 6,000 of which were issued on July 1.There were no other common stock transactions during the year,and there is no potential dilution of earnings per share.What should be the year's basic earnings per common share of Neron,rounded to the nearest penny?

When a company with a complex capital structure has a loss from continuing operations and potentially dilutive securities,the calculation of earning per share (EPS)results in

The following information relates to the Tykex Company for 2014: What is diluted earnings per share?

During its fiscal year,Deerborn Distributing had net income of $100,000 (no extraordinary items)and 50,000 shares of common stock and 10,000 shares of preferred stock outstanding.Deerborn declared and paid dividends of $.50 per share to common and $6.00 per share to preferred.The preferred stock is convertible into common stock on a share-for-share basis.For the year,Deerborn Distributing should report diluted earnings (loss)per share of

In applying the treasury stock method of computing diluted earnings per share,when is it appropriate to use the average market price of common stock during the year as the assumed repurchase price?

The 2014 net income of Beguile Inc.was $200,000 and 100,000 shares of its common stock were outstanding during the entire year.In addition,there were outstanding options to purchase 10,000 shares of common stock at $10 per share.These options were granted in 2011 and none had been exercised by December 31,2014.Market prices of Beguile's common stock during 2014 were The amount that should be shown as Beguile's diluted earnings per share for 2014 (rounded to the nearest cent)is

What is the correct treatment of a stock dividend issued in mid-year when computing the weighted-average number of common shares outstanding for earnings per share purposes?