Question

The following information pertains to Medallion Company for the year 2013 Net Income for the year $2,400,000 8% convertible bonds, issued at par ($1,000 per bond). Each bond convertible into 30 shares of common. (Bonds are outstanding at year end) $4,000,000 6% cumulative preferred stock, $100 par value, (None converted during the year) $6,000,000 Common Stock Issued and Outstanding, $10 Par Value $12,000,000 Additional Information: Average Market price of common stock (per share) $25 Option Price (to purchase shares) $20 Number of share to purchase (under options) 150,000 Income Tax Rate 32% Note: There were no changes during the year on the number of common shares, preferred shares or convertible bonds outstanding. There is no treasury stock. As noted above, the company has common stock options outstanding (granted in a previous year) to purchase 150,000 shares of common stock at $20 per share Note the requirements below - Round your answer to two decimal places. Required: A] Calculate the Basic (Simple) Earnings per Share

          The following information pertains to Medallion Company for the year 2013
Net Income for the year $2,400,000 
8% convertible bonds, issued at par ($1,000 per bond).  
Each bond convertible into 30 shares of common. (Bonds are outstanding at year end) $4,000,000 
6% cumulative preferred stock, $100 par value, (None converted during the year) $6,000,000 
Common Stock Issued and Outstanding, $10 Par Value $12,000,000 
Additional Information: 
Average Market price of common stock (per share) $25 
Option Price (to purchase shares) $20 
Number of share to purchase (under options)                                           150,000 
Income Tax Rate 32%
Note: There were no changes during the year on the number of common shares, preferred shares or convertible bonds outstanding.  There is no treasury stock.  As noted above, the company has common stock options outstanding (granted in a previous year) to purchase 150,000 shares of common stock at $20 per share
Note the requirements below - Round your answer to two decimal places.
Required:
 A] Calculate the Basic (Simple) Earnings per Share

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Added by Christina H.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Supreeta N

07/28/2023

Step 1

Common stock issued and outstanding = $6,000,000; Par value = $10 per share. Shares outstanding = $6,000,000 / $10 = 600,000 shares. Show more…

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The following information pertains to Medallion Company for the year 2013 Net Income for the year $2,400,000 8% convertible bonds, issued at par ($1,000 per bond). Each bond convertible into 30 shares of common. (Bonds are outstanding at year end) $4,000,000 6% cumulative preferred stock, $100 par value, (None converted during the year) $6,000,000 Common Stock Issued and Outstanding, $10 Par Value $12,000,000 Additional Information: Average Market price of common stock (per share) $25 Option Price (to purchase shares) $20 Number of share to purchase (under options) 150,000 Income Tax Rate 32% Note: There were no changes during the year on the number of common shares, preferred shares or convertible bonds outstanding. There is no treasury stock. As noted above, the company has common stock options outstanding (granted in a previous year) to purchase 150,000 shares of common stock at $20 per share Note the requirements below - Round your answer to two decimal places. Required: A] Calculate the Basic (Simple) Earnings per Share

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Transcript

00:01 Hello students, here is a question.

00:01 At the end of an year, to record a geocorporation provided the following selected and incorporated data.

00:08 Common stock is 1 ,500 ,000, 1 par value, no changes in account during an year.

00:14 The share authorized is 5 ,000 ,000, share issued.

00:18 So, all the share were issued at 80 per share.

00:21 Shareholders are treasury stock of 100 ,000 share.

00:24 So, it has been repurchased at 60 dollars per share.

00:28 The net income is 4 ,800 ,000 dollars.

00:31 The dividend declared are 2.

00:33 Per share retained earnings at the beginning of balance is 82 ,900 ,000 dollars.

00:38 So, this is our question.

00:39 We have 5 questions to solve here.

00:41 Let us start solving this.

00:43 The first question will be answer the following.

00:46 How many issue shares are there and how many outstanding shares are there? so, first a will be number of share issued are issued that is common stock divided by par, par value of share.

01:14 So, that will be 1 ,500 ,000 divided by 1 which gives us 1 ,500 ,000 shares and b part is number of shares outstanding will be total number of share issued minus share held in company.

01:40 So, that will be 1 ,500 ,000 minus 1 ,400 ,000 shares, sorry 1 ,000 ,000 shares, 100 shares, 1 ,500 ,000 share minus 100 shares which gives us 1 ,400 ,000 share.

02:08 So, now we will solve for the second sub question...

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