Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 16, Problem 26E
Tama Company’s capital structure consists of common stock and convertible bonds. At the beginning of 2019, Tama had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of $80,000 and were issued in 2016 at par. Each $1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds have been converted. During 2019, the company earned net income of $79,200 and was subject to an income tax rate of 30%.
Required:
Compute the 2019 diluted earnings per share.
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XYZ Inc. has 3,600,000 ordinary shares outstanding on December 31, 2019. An additional 800,000 ordinary shares were issued on April 1, 2020, and 400,000 ordinary shares more on July 1, 2020. On October 1, 2020, XYZ Inc. issued 20,000, P1,000 face value, 8% convertible bonds. Each bond is convertible into 20 ordinary shares. No bonds were converted into ordinary shares in 2020. What is the number of shares to be used in computing basic EPS and diluted EPS, respectively? A. 4,400,000 and 4,400,000B. 4,400,000 and 4,500,000C. 4,400,000 and 4,800,000D. 4,800,000 and 5,600,000
XYZ Inc. has 3,600,000 ordinary shares outstanding on December 31, 2019. An additional 800,000 ordinary shares were issued on April 1, 2020, and 400,000 ordinary shares more on July 1, 2020. On October 1, 2020, XYZ Inc. issued 20,000, P1,000 face value, 8% convertible bonds. Each bond is convertible into 20 ordinary shares. No bonds were converted into ordinary shares in 2020. What is the number of shares to be used in computing basic EPS and diluted EPS, respectively?
A. 4,400,000 and 4,400,000
B. 4,400,000 and 4,500,000
C. 4,400,000 and 4,800,000
D. 4,800,000 and 5,600,000
E. answer not given
MHB Ltd. sold $6,740,000 of 12% bonds, which were dated March 1, 2023, on June 1, 2023. The bonds paid interest on September 1
and March 1 of each year. The bonds' maturity date was March 1, 2033, and the bonds were issued to yield 14%. MHB's fiscal year-end
was February 28, and the company followed IFRS.
On June 1, 2024, MHB bought back $2,740,000 worth of bonds for $2,640,000 plus accrued interest.
(a)
Your answer is partially correct.
Using 1. a financial calculator, or 2. Excel function PV, calculate the issue price of the bonds and prepare the entry for the issuance
of the bonds. Hint: Use the account Interest Expense in your entry). (Round answer to O decimal places, e.g. 5,275. Credit account
titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the
account titles and enter O for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
Cash
Interest Expense
Bonds…
Chapter 16 Solutions
Intermediate Accounting: Reporting And Analysis
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