Francis Company has 12,000 shares of common stock outstanding at the beginning of 2013. Francis issued 1,500 additional shares on May 1 and 1,000 additional shares on September 30. It also has two convertible securities outstanding at the end of 2013. These are:
Convertible preferred stock: 1,250 shares of 8.5%, $50 par, preferred stock were issued on January 2, 2010, for $55 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared and paid. To date, no preferred stock has been converted.
Convertible bonds: Bonds with a face value of $125,000 and an interest rate of 5.5% were issued at par in 2012. Each $1,000 bond is convertible into 20 shares of common stock. To date, no bonds have been converted.
Francis earned net income of $50,000 during 2013. The income tax rate is 30%
1) Calculate basic earnings per share for 2013. If required, round your answer to the nearest cent..
2). Calculate diluted earnings per share for 2013 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to the nearest cent.
Diluted earnings per share: xxxxxx
3) Incremental Earning Per share xxxxx
a) Bonds xxxxxx
b) Preferred xxxxx
Francis Company has 12,000 shares of common stock outstanding at the beginning of 2013. Francis issued 1,500 additional shares on May 1 and 1,000 additional shares on September 30. It also has two convertible securities outstanding at the end of 2013. These are:
Convertible preferred stock: 1,250 shares of 8.5%, $50 par, preferred stock were issued on January 2, 2010, for $55 per share. Each share of preferred stock is convertible into 3 shares of common stock. Current dividends have been declared and paid. To date, no preferred stock has been converted.
Convertible bonds: Bonds with a face value of $125,000 and an interest rate of 5.5% were issued at par in 2012. Each $1,000 bond is convertible into 20 shares of common stock. To date, no bonds have been converted.
Francis earned net income of $50,000 during 2013. The income tax rate is 30%
1) Calculate basic earnings per share for 2013. If required, round your answer to the nearest cent..
2). Calculate diluted earnings per share for 2013 and the incremental EPS of the preferred stock and convertible bonds. If required, round your answers to the nearest cent.
Diluted earnings per share: xxxxxx
3) Incremental Earning Per share xxxxx
a) Bonds xxxxxx
b) Preferred xxxxx
Related questions
Analyzing and Interpreting Equity Accounts and Comprehensive Income
Following is the shareholdersâ equity section of the 2013 balance sheet for Procter & Gamble Company and its statement of shareholdersâ equity.
| June 30 (In millions, except per share amounts) | 2013 |
|---|---|
| Shareholders' Equity | |
| Convertible Class A preferred stock, stated value $ 1 per share | |
| (600 shares authorized) | $ 1,137 |
| Non-voting Class B preferred stock, stated value $ 1 per share | |
| (200 shares authorized) | -- |
| Common stock, stated value $ 1 per share | |
| (10,000 shares authorized; shares issued: 2013-4,009.2) | 4,009 |
| Additional paid-in capital | 63,538 |
| Reserve for ESOP debt retirement | (1,352) |
| Accumulated other comprehensive income/(loss) | (7,499) |
| Treasure stock, at cost (shares held: 2013-1,266.9) | (71,966) |
| Retained earnings | 80,197 |
| Noncontrolling interest | 645 |
| Total shareholders' equity | $ 68,709 |
| Consolidated Statement of Shareholders' Equity | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in millions; Shares in thousands | Common Shares Outstanding | Common Stock | Preferred Stock | Additional Paid-in Capital | Reserve for ESOP Debt Retirement | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Retained Earnings | Noncontrolling Interest | Total |
| Balance June 30, 2012 | $ 2,748,033 | $ 4,008 | $ 1,195 | $ 63,181 | $ (1,357) | $ (9,333) | $ (69,604) | $ 75,349 | $ 596 | $ 64,035 |
| Net earnings | 11,312 | 90 | 11,402 | |||||||
| Other comprehensive income | 1,834 | 1,834 | ||||||||
| Dividends to shareholders: | ||||||||||
| Common | (6,275) | (6,275) | ||||||||
| Preferred, net of tax benefits | (244) | (244) | ||||||||
| Treasury purchases | (84,234) | (5,986) | (5,986) | |||||||
| Employee plan issuances | 70,923 | 1 | 352 | 3,573 | 3,926 | |||||
| Preferred stock conversions | 7,605 | (58) | 7 | 51 | â | |||||
| ESOP debt impacts | 5 | 55 | 60 | |||||||
| Noncontrolling interest, net | (2) | (41) | (43) | |||||||
| Balance June 30, 2013 | $ 2,742,327 | $ 4,009 | $ 1,137 | $ 63,538 | $ (1,352) | $ (7,499) | $ (71,966) | $ 80,197 | $ 645 | $ 68,709 |
(a) What does the term convertible (in reference to the company's Class A preferred stock) mean?
Convertible means the holder of the security has an obligation to convert (exchange) the security into another security.
Convertible means the holder of the security has an option to surrender the security and to receive cash at any time.
Convertible means the holder of the security has an option to convert (exchange) the security into another security.
Convertible means the holder of the security has an option to sell the security at any time.
(b) How many shares of common stock did Procter & Gamble issue when convertible Class A preferred stock was converted during fiscal 2013?
Answer
thousand shares
(c) For "employee plan issuances," at what average price was the common stock issued as of year-end 2013? (Round your answer to two decimal places.)
$Answer
(d) What is the accumulated other comprehensive income account?
The accumulated other comprehensive income account reflects the cumulative profit recognized by the company less the cumulative dividends that have been paid to shareholders.
The accumulated other comprehensive income account reflects the cumulative change in net assets (defined as assets less liabilities) for transactions other than net income transactions and transactions with shareholders.
The accumulated other comprehensive income account reflects the cumulative profit on transactions with shareholders.
The accumulated other comprehensive income account reflects the cumulative amount by which the company's common stock has increased or decreased since issuance.
(e) What cash dividends did Procter & Gamble pay in 2013 for each class of stock?
Common dividends =Answer
($ millions)
Preferred dividends =Answer($ millions)
