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During all 2015, Abel inc had 831,000 shares of common stock and 45,000 shares of $80 par value, 7%, noncumulative, nonconvertible preferred stock issued and outstanding. Abel paid cash dividends of $550,000 to common shareholders, and also cash dividends of ??? to preferred shareholders, on dec 15, 2015.

Abel’s net income for the year ended dec 31, 2015, was $2,850,000. The income tax rate is 40%.

As part of an incentive compensation plan, Abel granted 22,000 incentive stock options to division managers at dec 31, 2013. Each option permits its holder to buy one share of common stock at an exercise price of $36 per share which can be exercise one year from that date. The market price of the common stock average $40 per share during 2015.

On july 12, 2013, Abel issued $800,000 of convertible 10%bonds at face value. Each $1,000 bond is convertible into 40 common shares.

A.Compute Abel’s basic earnings per share for the year ended dec 31, 2015.

B.Compute Abel’s fully diluted earnings per share for the year ended dec 31, 2015.

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29 Sep 2019
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On December 31, 2015, Dow Steel Corporation had 770,000 shares of common stock and 47,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $570,000 and $86,000 to common and preferred shareholders, respectively, on December 15, 2016. On February 28, 2016, Dow sold 68,000 common shares. Also, as a part of a 2015 agreement for the acquisition of Merrill Cable Company, another 35,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2017, if Merrill's 2017 net income is at least $670,000. In 2016, Merrill's net income was $800,000. In keeping with its long-term share repurchase plan, 4,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2016, was $2,950,000. The income tax rate is 40%. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted Options Granted Share Price (adjusted for the stock dividend) December 31, 2014 24,000 $ 40 December 31, 2015 19,000 $ 49 December 31, 2016 22,500 $ 48 The market price of the common stock averaged $48 per share during 2016. On July 12, 2014, Dow issued $900,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 40 common shares (adjusted for the stock dividend). Required: Compute Dow's basic and diluted earnings per share for the year ended December 31, 2016. (Enter your answers in thousands.)

On December 31, 2015, Dow Steel Corporation had 700,000 shares of common stock and 40,000 shares of 10%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $500,000 and $79,000 to common and preferred shareholders, respectively, on December 15, 2016. On February 28, 2016, Dow sold 64,000 common shares. Also, as a part of a 2015 agreement for the acquisition of Merrill Cable Company, another 31,000 shares (already adjusted for the stock dividend) are to be issued to former Merrill shareholders on December 31, 2017, if Merrill's 2017 net income is at least $600,000. In 2016, Merrill's net income was $730,000. In keeping with its long-term share repurchase plan, 6,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2016, was $2,600,000. The income tax rate is 40%. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Date Granted Options Granted Share Price (adjusted for the stock dividend) December 31, 2014 17,000 $ 26 December 31, 2015 12,000 $ 35 December 31, 2016 15,500 $ 34 The market price of the common stock averaged $34 per share during 2016. On July 12, 2014, Dow issued $800,000 of convertible 10% bonds at face value. Each $1,000 bond is convertible into 40 common shares (adjusted for the stock dividend).

Compute Dow's basic and diluted earnings per share for the year ended December 31, 2016

P 19–12 EPS; nonconvertible preferred stock; treasury shares;shares sold; stock dividend; options LO19–4 through LO19–8, LO19–10(Note: This is a variation of P19–12, modified to include stockoptions.) On December 31, 2015, Dow Steel Corporation had 600,000shares of common stock and 300,000 shares of 8%, noncumulative,nonconvertible preferred stock issued and outstanding. Dow issued a4% common stock dividend on May 15 and paid cash dividends of$400,000 and $75,000 to common and preferred shareholders,respectively, on December 15, 2016. On February 28, 2016, Dow sold60,000 common shares. In keeping with its long-term sharerepurchase plan, 2,000 shares were retired on July 1. Dow’s netincome for the year ended December 31, 2016, was $2,100,000. Theincome tax rate is 40%. As part of an incentive compensation plan,Dow granted incentive stock options to division managers atDecember 31 of the current and each of the previous two years. Eachoption permits its holder to buy one share of common stock at anexercise price equal to market value at the date of grant and canbe exercised one year from that date. Information concerning thenumber of options granted and common share prices follows: Themarket price of the common stock averaged $32 per share during2016.

Date Granted Options Granted Share Price

(Adjusted for the stock dividend)

December 31, 2014 8,000 $24

December 31, 2015 3,000 $33

December 31, 2016 6,500 $32

Required: Compute Dow’s earnings per share for the year endedDecember 31, 2016.

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