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    P16-8 Barkley Company P23-6 MARCUS INC. Basic and Diluted

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    P16-8 (Computation of Basic and Diluted EPS) The information below pertains to Barkley Company for 2010.

    Net income for the year $1,200,000
    8% convertible bonds issued at par ($1,000 per bond). Each bond is convertible into 30 shares of common stock. 2,000,000

    6% convertible, cumulative preferred stock, $100 par value. Each share is convertible into 3 shares of common stock. 4,000,000

    Common stock, $10 par value 6,000,000
    Tax rate for 2010 40%
    Average market price of common stock $25 per share

    There were no changes during 2010 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 75,000 shares of common stock at $20 per share.

    Instructions
    (a) Compute basic earnings per share for 2010.
    (b) Compute diluted earnings per share for 2010.

    P23-6 (SCF?Indirect Method, and Net Cash Flow from Operating Activities, Direct Method)

    Comparative balance sheet accounts of Marcus Inc. are presented below.
    MARCUS INC.
    COMPARATIVE BALANCE SHEET ACCOUNTS
    AS OF DECEMBER 31, 2010 AND 2009

    December 31
    Debit Accounts 2010 2009

    Cash $ 42,000 $ 33,750
    Accounts Receivable 70,500 60,000
    Merchandise Inventory 30,000 24,000
    Investments (available-for-sale) 22,250 38,500
    Machinery 30,000 18,750
    Buildings 67,500 56,250
    Land 7,500 7,500
    $269,750 $238,750
    Credit Accounts
    Allowance for Doubtful Accounts $ 2,250 $ 1,500
    Accumulated Depreciation?Machinery 5,625 2,250
    Accumulated Depreciation?Buildings 13,500 9,000
    Accounts Payable 35,000 24,750
    Accrued Payables 3,375 2,625
    Long-Term Note Payable 21,000 31,000
    Common Stock, no par 150,000 125,000
    Retained Earnings 39,000 42,625
    $269,750 $238,750

    Additional data (ignoring taxes):
    1. Net income for the year was $42,500.
    2. Cash dividends declared and paid during the year were $21,125.
    3. A 20% stock dividend was declared during the year. $25,000 of retained earnings was capitalized.
    4. Investments that cost $25,000 were sold during the year for $28,750.
    5. Machinery that cost $3,750, on which $750 of depreciation had accumulated, was sold for $2,200.

    Marcus's 2010 income statement follows (ignoring taxes).

    Sales $540,000
    Less: Cost of goods sold 380,000

    Gross margin 160,000
    Less: Operating expenses (includes $8,625 depreciation and $5,400
    bad debts) 120,450
    Income from operations 39,550
    Other: Gain on sale of investments $3,750
    Loss on sale of machinery (800) 2,950
    Net income $ 42,500

    Instructions
    (a) Compute net cash flow from operating activities using the direct method.
    (b) Prepare a statement of cash flows using the indirect method.

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    https://brainmass.com/business/statement-of-cash-flows/472850

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    Solution Summary

    Your tutorial is in Excel, attached. Each problem is on a separate tab. I created some account analysis so you could see how I found the amounts for write offs, purchases of investments, purchases for building and purchases for machinery.

    $2.19

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