Robertson Company reported the following stockholder’s equity section of the balance sheet on 1/1/14:
Common Stock, $2 par value $ 46,000
APIC - Common Stock 149,500
Retained Earnings 203,000
During 2014, Robertson Company engaged in the treasury stock transactions listed below:
2/9: Robertson Company repurchases and retires 4,000 shares at a price of $7 per share
5/29: Robertson Company repurchases and retires 6,100 shares at a price of $12 per share
11/18: Robertson Company issues 3,800 shares at a price of $17 per share
(a) On Jan 1, 2014, what is the average cost of shares issued?
(b) Prepare the February 9th, May 29th and November 18th journal entries
(c) Prepare the stockholders equity section of the balance sheet on 12/31/14.
Assume that Antonio Company has a stock-option plan for top management. Each stock option represents the right to purchase a share of Antonio Company $1 par value common stock beginning January 1, 2015. Employees must exercise this option before December 31, 2017. Antonio Company granted 5,000 stock options at the beginning of 2010. The following data related to the options grant:
Market price of stock at the grant date (January 1, 2010) $40
Fair value of the options at grant date (January 1, 2010) 6
Market price of stock at December 31, 2010 45
(a) Prepare the stock option related disclosure and journal entries for 2010, 2011, 2012, and 2013.
(b) Assume that during 2014, 15% of the stock options are forfeited. Prepare the stock option related journal entries on 12/31/14.Assume that rather than options, 700 shares of restricted stock were granted at the beginning of 2010. Employees were restricted from selling the stock until January 1, 2015. Prepare the restricted stock related disclosure and journal entries for 2010, 2011, 2012, and 2013.
(c) Assume that during 2014, 30% of the restricted stocks are forfeited. Prepare the restricted stock related journal entries on 12/31/14.
(d) Assume on January 1, 2010, the company also implemented an employee stock purchase plan (ESPP) where employees were able to purchase stock for $40 per share. Assuming 3,000 shares were issued under this plan on December 31, 2010, prepare the journal entries to record the ESPP plan.
Umbatya Company is preparing its annual income statement for 2013 and 2014. Income from continuing operations after taxes was $1,840,000 and $2,370,000, respectively for 2013 and 2014.
Umbatya Company also experienced an extraordinary loss of $630,000 after taxes due to an earthquake on March 3, 2014. The tax rate is 40%.
As of January 1, 2013, Umbatya Company has 40,000 shares of $100 par value, 6% noncumulative, nonconvertible preferred stock. Dividends were not declared or paid in fiscal year 2013 but were declared and paid on December 31, 2014. Umbatya Company also has 14,000 stock options with an exercise price of $20 per share. Average market price of common stock is $17 per share in fiscal year 2013 and $18 per share in fiscal year 2014.
On January 1, 2013, Umbatya Company had 1,000,000 shares of $1 par common stock outstanding. On April 1, 2013, Umbatya Company issued an additional 400,000 shares of common stock. Umbatya Company also distributed a 15% stock dividend on common shares on July 1, 2013. On November 1, 2013, Umbatya Company repurchased 30,000 shares of common stock as treasury stock. Umbatya Company issued an additional 750,000 shares of common stock on May 1, 2014 and repurchased 60,000 shares of the treasury stock October 1, 2014.
(a) Calculated Umbatya’s 2013 and 2014 Weighted Average Common Shares Outstanding
(b) Prepare Umbatya’s Basic Earnings per Share (EPS) income statement presentation for 2013 and 2014.
On December 31, 2013, Mickey Company reports Net Income of $105,400. The weighted average common shares outstanding for 2013 is 39,000. No dividends have been declared or paid during 2013.
The tax rate is 30%. Mickey Company also reports the following four convertible securities outstanding during all 2013:
11.0% Bonds: $220,000 face (maturity) value. Issued at par. Each $1,000 bond converts into 44 shares of common stock.
10.0% Bonds: $100,000 face (maturity) value. Issued at a market of 11.4% with a current book value of $90,350. Each $1,000 bond converts into 55 shares of common.
9.5% Preferred: $200,000 preferred stock. Cumulative. Each $100 par value preferred share converts into 4.2 shares of common stock.
Stock Options: 22,000 options. Exercise price is $20. Average market price common stock is $32 per share.
(a) Calculate the Basic Earnings per Share (BEPS) that Mickey Company should report on its 2013 income statement.
(b) Calculate the Diluted Earnings per Share (DEPS) that Mickey Company should report on its 2013 income statement. Be sure to indicate the incremental impact of each dilutive security and incorporate it appropriately into the DEPS calculation.
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