1) Net income (including an extraordinary gain (net tax) of $70,000 $230,000
2) Capital Structure
a) cumulative 8% preferred stock, $100 par 6,000 shares issued/outstanding $600,000
b) $10 par common stock, 74,000 shares outstanding on January 1. $1,000,000
On April 1, 40,000 shares were issued for cash. On October 1, 16,000
shares were purchased and retired.
c) On January 2 of the current year, Berry purchased Raye Corp.
One of the terms of the purchase was that if Berry's net income
for the following year is $240,000 or more 50,000 shares would
be issued to Raye stockholders next year.
3) Other information
a) average market price per share of common stock during entire year $30
b) Income tax rate 30%
We first find out the weighted average shares outstanding
74,000 shares are outstanding from Jan 1 to Mar 31 = 3 months
(74,000+40,000)=114,000 shares are outstanding from April 1 to Sep 30 = 6 months
(114,000-16,000)=98,000 shares are outstanding from Oct 1 to Dec 31 = 3 months
Weighted average ...
The solution explains how to calculate the basic and diluted EPS
Garner: Inventory method; basic diluted EPS; convertible bonds
Garner Company began operations on January 1, 2015, and uses the average cost method of pricing inventory. Management is contemplating a change in inventory methods for 2018. The following information is available for the years 2015-2017.
(See attached file)
On January 1, 2017, Garner issued 10-year, $200,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 30 shares of Garner common stock. The company has had 10,000 common shares outstanding throughout its life. None of the bonds have been exercised as of the end of 2018. (Ignore tax effects.)
Click here to download the Excel Template containing the spreadsheet you will need for this exercise.
Using the spreadsheet Journal Entries, prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2018.
Assume Garner Company used the LIFO method instead of the average cost method during the years 2015-2017. In 2018, Garner changed to the FIFO method. Using the spreadsheet Journal Entries, prepare the journal entry necessary to record the change in accounting principle.
Assume Garner had the accounting change described in (2); Garner's income in 2018 was $30,000. Compute basic and diluted earnings per share for Garner Company for 2018. Show how income and EPS will be reported for 2018 and 2017.View Full Posting Details