Beruflich Dokumente
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99. On January 2, 2007, Dino Co. issued at par $300,000 of 9% 106. Colaw Company had 300,000 shares of common stock issued and
convertible bonds. Each $1,000 bond is convertible into 30 shares. outstanding at December 31, 2006. During 2007, no additional
No bonds were converted during 2007. Dino had 50,000 shares of
common stock was issued. On January 1, 2007, Colaw issued
common stock outstanding during 2007. Dino's 2007 net income was
$160,000 and the income tax rate was 30%. Dino's diluted earnings 400,000 shares of nonconvertible preferred stock. During 2007,
per share for 2007 would be (rounded to the nearest penny) Colaw declared and paid $180,000 cash dividends on the common
a. $2.71. stock and $150,000 on the nonconvertible preferred stock. Net
b. $3.03.
income for the year ended December 31, 2007, was $960,000.
c. $3.20.
d. $3.58. What should be Colaw's 2007 earnings per common share, rounded
to the nearest penny?
100. At December 31, 2006, Kegan Co. had 1,200,000 shares of common a. $1.16
stock outstanding. In addition, Kegan had 450,000 shares of b. $2.10
preferred stock which were convertible into 750,000 shares of c. $2.70
common stock. During 2007, Kegan paid $600,000 cash dividends d. $3.20
on the common stock and $400,000 cash dividends on the preferred
stock. Net income for 2007 was $3,400,000 and the income tax rate 107.At December 31, 2006, Agler Company had 1,200,000 shares of common
was 40%. The diluted earnings per share for 2007 is (rounded to the
nearest penny) stock outstanding. On September 1, 2007, an additional 400,000 shares of
a. $1.24. common stock were issued. In addition, Agler had $12,000,000 of 6%
b. $1.74. convertible bonds outstanding at December 31, 2006, which are convertible
c. $2.51.
into 800,000 shares of common stock. No bonds were converted into common
d. $2.84.
stock in 2007. The net income for the year ended December 31, 2007, was
Use the following information for questions 101 and 102. $4,500,000. Assuming the income tax rate was 30%, what should be the
Gilley Co. had 200,000 shares of common stock, 20,000 shares of convertible diluted earnings per share for the year ended December 31, 2007, rounded to
preferred stock, and $1,000,000 of 10% convertible bonds outstanding during the nearest penny?
a. $2.11
2007. The preferred stock is convertible into 40,000 shares of common stock.
b. $3.38
During 2007, Gilley paid dividends of $.90 per share on the common stock and c. $2.35
$3.00 per share on the preferred stock. Each $1,000 bond is convertible into d. $2.45
45 shares of common stock. The net income for 2007 was $600,000 and the
income tax rate was 30%. 108. Foley Company has 1,800,000 shares of common stock outstanding
on December 31, 2006. An additional 150,000 shares of common
101. Basic earnings per share for 2007 is (rounded to the nearest penny) stock were issued on July 1, 2007, and 300,000 more on October 1,
a. $2.21.
b. $2.42. 2007. On April 1, 2007, Foley issued 6,000, $1,000 face value, 8%
c. $2.51. convertible bonds. Each bond is convertible into 40 shares of
d. $2.70. common stock. No bonds were converted into common stock in
2007. What is the number of shares to be used in computing basic
earnings per share and diluted earnings per share, respectively, for during 2007. On January 1, 2007, Peine issued 200,000 shares of
nonconvertible preferred stock. During 2007, Peine declared and
the year ended December 31, 2007?
paid $100,000 cash dividends on the common stock and $80,000 on
a. 1,950,000 and 2,130,000
the preferred stock. Net income for the year ended December 31,
b. 1,950,000 and 1,950,000
2007 was $620,000. What should be Peine's 2007 earnings per
c. 1,950,000 and 2,190,000
common share?
d. 2,250,000 and 2,430,000
a. $2.07
b. $1.80
c. $1.73
d. $1.47
114. At December 31, 2007 and 2006, Glass Corp. had 180,000 shares of
common stock and 10,000 shares of 5%, $100 par value cumulative
preferred stock outstanding. No dividends were declared on either
the preferred or common stock in 2007 or 2006. Net income for 2007
was $400,000. For 2007, earnings per common share amounted to
Use the following information for questions 109 and 110.
a. $2.22.
Information concerning the capital structure of Simot Corporation is as follows: b. $1.94.
c. $1.67.
d. $1.11.
115. Royce Co. had 2,400,000 shares of common stock outstanding on
January 1 and December 31, 2007. In connection with the
December 31, acquisition of a subsidiary company in June 2006, Royce is required
2006 2007 to issue 100,000 additional shares of its common stock on July 1,
Common stock 150,000 shares 150,000 shares 2008, to the former owners of the subsidiary. Royce paid $200,000 in
Convertible preferred stock 15,000 shares 15,000 shares preferred stock dividends in 2007, and reported net income of
9% convertible bonds $2,400,000 $2,400,000 $3,400,000 for the year. Royce's diluted earnings per share for 2007
During 2007, Simot paid dividends of $1.20 per share on its common stock and should be
$3.00 per share on its preferred stock. The preferred stock is convertible into a. $1.42.
30,000 shares of common stock. The 9% convertible bonds are convertible b. $1.36.
into 75,000 shares of common stock. The net income for the year ended c. $1.33.
December 31, 2007, was $600,000. Assume that the income tax rate was 30%. d. $1.28.
109. What should be the basic earnings per share for the year ended 116. Eller, Inc., had 560,000 shares of common stock issued and
December 31, 2007, rounded to the nearest penny? outstanding at December 31, 2006. On July 1, 2007, an additional
a. $2.66 40,000 shares of common stock were issued for cash. Eller also had
b. $2.92 unexercised stock options to purchase 32,000 shares of common
c. $3.70 stock at $15 per share outstanding at the beginning and end of 2007.
d. $4.00 The average market price of Eller's common stock was $20 during
2007. What is the number of shares that should be used in
110. What should be the diluted earnings per share for the year ended computing diluted earnings per share for the year ended December
December 31, 2007, rounded to the nearest penny? 31, 2007?
a. $3.20 a. 580,000
b. $2.95 b. 588,000
c. $2.83 c. 608,000
d. $2.35 d. 612,000
111. Warrants exercisable at $20 each to obtain 30,000 shares of
common stock were outstanding during a period when the average 117. When computing diluted earnings per share, convertible securities
market price of the common stock was $25. Application of the are
treasury stock method for the assumed exercise of these warrants in a. ignored.
computing diluted earnings per share will increase the weighted b. recognized only if they are dilutive.
average number of outstanding shares by c. recognized only if they are antidilutive.
a. 30,000. d. recognized whether they are dilutive or antidilutive.
b. 24,000.
c. 6,000. 118. In determining diluted earnings per share, dividends on
d. 7,500. nonconvertible cumulative preferred stock should be
a. disregarded.
112. Ferry Corporation had 300,000 shares of common stock outstanding b. added back to net income whether declared or not.
at December 31, 2007. In addition, it had 90,000 stock options c. deducted from net income only if declared.
outstanding, which had been granted to certain executives, and d. deducted from net income whether declared or not.
which gave them the right to purchase shares of Ferry's stock at an
option price of $37 per share. The average market price of Ferry's 119. The if-converted method of computing earnings per share data
common stock for 2007 was $50. What is the number of shares that assumes conversion of convertible securities as of the
should be used in computing diluted earnings per share for the year a. beginning of the earliest period reported (or at time of issuance,
ended December 31, 2007? if later).
a. 300,000 b. beginning of the earliest period reported (regardless of time of
b. 331,622 issuance).
c. 366,600 c. middle of the earliest period reported (regardless of time of
d. 323,400 issuance).
d. ending of the earliest period reported (regardless of time of
MULTIPLE CHOICEEarnings Per ShareCPA Adapted issuance).
113. Peine Co. had 300,000 shares of common stock issued and
outstanding at December 31, 2006. No common stock was issued