On January 1, 2012, Chang Corp. had 524,000 shares of common stock outstanding. During 2012, it had the following transactions that affected the Common Stock account.
February 1 Issued 137,000 shares
March 1 Issued a 20% stock dividend
May 1 Acquired 105,000 shares of treasury stock
June 1 Issued a 3-for-1 stock split
October 1 Reissued 71,200 shares of treasury stock
(a)
Determine the weighted-average number of shares outstanding as of December 31, 2012.
The weighted-average number of shares outstanding
Exercise 16-20
On January 1, 2012, Bailey Industries had stock outstanding as follows.
6% Cumulative preferred stock, $102 par value,
issued and outstanding 12,000 shares
$1,224,000
Common stock, $10 par value, issued and
outstanding 250,800 shares 2,508,000
To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional 213,600 common shares. The acquisitions took place as shown below.
Date of Acquisition
Shares Issued
Company A April 1, 2012 80,400
Company B July 1, 2012 100,800
Company C October 1, 2012 32,400
On May 14, 2012, Bailey realized a $124,800 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.
On December 31, 2012, Bailey recorded net income of $343,200 before tax and exclusive of the gain.
Assuming a 45% tax rate, compute the earnings per share data that should appear on the financial statements of Bailey Industries as of December 31, 2012. Assume that the expropriation is extraordinary. (Round answer to 2 decimal places, e.g. $2.55.)
Bailey Industries
Income Statement
For the year ended December 31, 2012
Problem 16-5
Amy Dyken, controller at Fitzgerald Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Fitzgerald's financial statements. Below is selected financial information for the fiscal year ended June 30, 2012.
FITZGERALD PHARMACEUTICAL INDUSTRIES
SELECTED BALANCE SHEET
INFORMATION
JUNE 30, 2012
Long-term debt
Notes payable, 10%
$1,125,000
7% convertible bonds payable
5,198,000
10% bonds payable
6,176,000
Total long-term debt
$12,499,000
Shareholders' equity
Preferred stock, 6% cumulative, $50 par value,
104,500 shares authorized, 26,125 shares issued and outstanding
$1,306,250
Common stock, $1 par, 10,196,000 shares authorized,
1,019,600 shares issued and outstanding
1,019,600
Additional paid-in capital
4,018,800
Retained earnings
6,015,600
Total shareholders' equity
$12,360,250
The following transactions have also occurred at Fitzgerald.
1. Options were granted on July 1, 2011, to purchase 208,000 shares at $16 per share. Although no options were exercised during fiscal year 2012, the average price per common share during fiscal year 2012 was $25 per share.
2. Each bond was issued at face value. The 7% convertible bonds will convert into common stock at 50 shares per $1,000 bond. The bonds are exercisable after 5 years and were issued in fiscal year 2011.
3. The preferred stock was issued in 2011.
4. There are no preferred dividends in arrears; however, preferred dividends were not declared in fiscal year 2012.
5. The 1,019,600 shares of common stock were outstanding for the entire 2012 fiscal year.
6. Net income for fiscal year 2012 was $1,585,000, and the average income tax rate is 45%.
For the fiscal year ended June 30, 2012, calculate the following for Fitzgerald Pharmaceutical Industries.
(a) Basic earnings per share.
(b) Diluted earnings per share.