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Assume that the following data relative to Kane Company for 2015is available: Net Income $2,600,000 Transactions in Common SharesChange Cumulative Jan. 1, 2015, Beginning number 700,000 Mar. 1,2015, Purchase of treasury shares (70,000) 630,000 June 1, 2015,Stock split 2-1 630,000 1,260,000 Nov. 1, 2015, Issuance of shares240,000 1,500,000 8% Cumulative Convertible Preferred Stock Sold atpar, convertible into 200,000 shares of common (adjusted forsplit). $1,000,000 Stock Options Exercisable at the option price of$25 per share. Average market price in 2015, $30 (market price andoption price adjusted for split). 90,000 shares Instructions (a)Compute the basic earnings per share for 2015. (Round to thenearest penny.) (b) Compute the diluted earnings per share for2015. (Round to the nearest penny.)

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Tod Thiel
Tod ThielLv2
28 Sep 2019

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Related questions

Assume that the following data relative to Kane Company for 2015is available:

Net Income

$2,800,000

Transactions in Common Shares

Change

Cumulative

Jan. 1, 2015, Beginning number

720,000

Mar. 1, 2015, Purchase of treasury shares

(53,400

)

666,600

June 1, 2015, Stock split 2-1

666,600

1,333,200

Nov. 1, 2015, Issuance of shares

228,000

1,561,200

8% Cumulative Convertible Preferred Stock

Sold at par, convertible into 180,000 shares of common (adjustedfor split).

$900,000

Stock Options

Exercisable at the option price of $25 per share. Average marketprice in 2015, $30 (market price and option price adjusted forsplit).

93,000

shares

a.Compute weighted-average shares outstanding for 2015.

b.Compute the basic earnings per share for 2015.(Round answer to 2 decimal places, e.g.52.75.)

c.Compute the diluted earnings per share for 2015.(Round answer to 2 decimal places, e.g.52.75.)

Assume that the following data relative to Chaps, Inc. for 2015is available:

Net Income $1,400,000

Transactions in Common Shares Change Cumulative

Jan. 1, 2012, Beginning number 500,000

Mar. 1, 2012, Purchase of treasury shares (60,000) 440,000

June 1, 2012, Stock split 2-1 440,000 880,000

Nov. 1, 2012, Issuance of shares 120,000 1,000,000

8% Cumulative Convertible Preferred Stock

Sold at par, convertible into 200,000 shares of common

(adjusted for split). $1,000,000

Stock Options

Exercisable at the option price of $25 per share. Average

market price in 2012, $30 (market price and option price

adjusted for split). 60,000 shares

Instructions

(a) Compute the basic earnings per share for 2015.(Round to the nearest penny.)

(b) Compute the diluted earnings per share for 2015.(Round to the nearest penny.)

P16-7 (Computation of Basic and Diluted EPS) Charles Austin ofthe controller’s office of Thompson Corporation was given theassignment of determining the basic and diluted earnings per sharevalues for the year ending December 31, 2015. Austin has compiledthe information listed below. 1. The company is authorized to issue8,000,000 shares of $10 par value common stock. As of December 31,2014, 2,000,000 shares had been issued and were outstanding. 2. Theper share market prices of the common stock on selected dates wereas follows. Price per ShareJuly 1, 2014 $20.00January 1, 2015 21.00April 1, 2015 25.00July 1, 2015 11.00 August 1, 2015 10.50November1, 2015 9.00December 31, 2015 10.00 3. A total of 700,000 shares ofan authorized 1,200,000 shares of convertible preferred stock hadbeen issued on July 1, 2014. The stock was issued at its par valueof $25, and it has a cumulative dividend of $3 per share. The stockis convertible into common stock at the rate of one share ofconvertible preferred for one share of common. The rate ofconversion is to be automatically adjusted for stock splits andstock dividends. Dividends are paid quarterly on September 30,December 31, March 31, and June 30. 4. Thompson Corporation issubject to a 40% income tax rate. 5. The after-tax net income forthe year ended December 31, 2015, was $11,550,000.The followingspecific activities took place during 2015. 1. January 1—A 5%common stock dividend was issued. The dividend had been declared onDecember 1, 2014, to all stockholders of record on December 29,2014.April 1—A total of 400,000 shares of the $3 convertiblepreferred stock was converted into common stock. The company issuednew common stock and retired the preferred stock. This was the onlyconversion of the preferred stock during 2015. 3. July 1—A 2-for-1split of the common stock became effective on this date. The boardof directors had authorized the split on June 1. 4. August 1—Atotal of 300,000 shares of common stock were issued to acquire afactory building. 5. November 1—A total of 24,000 shares of commonstock were purchased on the open market at $9 per share. Theseshares were to be held as treasury stock and were still in thetreasury as of December 31, 2015. 6. Common stock cashdividends—Cash dividends to common stockholders were declared andpaid as follows. April 15—$0.30 per share October 15—$0.20 pershare 7. Preferred stock cash dividends—Cash dividends to preferredstockholders were declared and paid as scheduled. Instructions (a)Determine the number of shares used to compute basic earnings pershare for the year ended December 31, 2015. (b) Determine thenumber of shares used to compute diluted earnings per share for theyear ended December 31, 2015. (c) Compute the adjusted net incometo be used as the numerator in the basic earnings per sharecalcu-lation for the year ended December 31, 2015.

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