Stock option, convertible securities, diluted EPS

ABE16-6

On January 1, 2012, Barwood Corporation granted 5,470 options to executives. Each option entitles the holder to purchase one share of Barwood's $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $66 per share on the date of grant. The fair value of the options at the grant date is $164,800. The period of benefit is 2 years. Prepare Barwood's journal entries for January 1, 2012, and December 31, 2012 and 2013. (If no entry is required, enter No Entry as the description and 0 as the amount.)

Date Description/Account Debit Credit

1/1/12
12/31/12
12/31/13

ABE16-12

Rockland Corporation earned net income of $419,700 in 2012 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $1,119,200 of 10% bonds, which are convertible into 22,384 shares of common. Rockland's tax rate is 40 percent. Compute Rockland's 2012 diluted earnings per share. (Round answer to 2 decimal places, e.g. 2.13.)

$______________________________

ABE16-13

DiCenta Corporation reported net income of $282,000 in 2012 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 6,910 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend of $5 per share. DiCenta' tax rate is 40%. Compute DiCenta' 2012 diluted earnings per share. (Round answer to 2 decimal places, e.g. 5.23.)

$________________________________

Solution Summary

Your tutorial gives instructional notes and the journal entries needed. Click in cells to see computations.