Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on january 1, 2014, green company issued 15-year,

On January 1, 2014, Green Company issued 15-year, $50,000,000 face value, 4% convertible preferred stock, at...

Free

50.1K

Verified Solution

Question

Accounting

On January 1, 2014, Green Company issued 15-year, $50,000,000face value, 4% convertible preferred stock, at par. Each $1,000preferred stock is convertible into 20 shares of Green’s commonstock. None of the preferred stocks were converted in 2014. Green’snet income in 2014 was $8,680,000, and its tax rate was 30%. Thecompany had 2,650,000 shares of common stock issued and outstandingthroughout 2014. Compute diluted earnings per share for 2014.

Answer & Explanation Solved by verified expert
4.2 Ratings (720 Votes)

Net Income for the year 2014 $8680000

Less tax @ 30%                       $2604000

After tax Net income               $6076000

Less Preference Dividend       $2000000

Net Income after Pref Div        $4076000

1.Calculation of the number of shares- It is based on the assumption that the preferred stocks were converted in 2014

Shares of Common Stock   2650000

Add Converted Preference Shares

$50000000/$1000*20 1000000       

Total Number of Shares =3650000

There fore diluted earnings per share in 2014 = $4076000/3650000

= $1.12

2.Calculation of the number of shares- It is based on the assumption that no preferred stocks were converted in 2014.

Total Number of shares -2650000

Therefore diluted earnings per share in 2014 =$4076000/2650000

                                                                       = $1.54
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Accounting
1.2K views

Rundle Company is considering the addition of a new product toits cosmetics line. The...

Medical Sciences
1.2K views

Name and describe two types of transport from the capillaries to the interstitial fluid. Name and describe...

Biology
1.2K views

homologous chromosomes sister chromatids non homologous chromosomes nonsister chromatids centromere O OND chromosome replication prior...

Physics
1.2K views

Question 7 The temperature dependence of the resistance of a non linear resistor is investigated...

Accounting
1.2K views

Division?...

Accounting
1.2K views

Governments often have services that operate much like a for-profit business. Give an example of...

Accounting
1.2K views

Required information [The following information applies to the questions displayed below.] NewTech purchases computer equipment...

Accounting
1.2K views

For the past 12 years, George Link has operated his appliance repair business out of...

Accounting
1.2K views

P-8: Underwriting Spread (LO15-2) Assume Sybase Software is thinking about three different size offerings for...

Accounting
1.2K views

Question 2 (1 point) When a manager calculates Payback. They are: Determining how to get...

Finance
1.2K views

Equity Method On January 1, 2014, The Miller Corporation purchased 300,000 shares of The Mayfair...

Finance
1.2K views

please answer question A , B and C. show proper steps and calculation. PROBLEMS...