Answer:
Thompson Corporation
1. Number of shares for computing basic earnings per share for the year ended December 31, 2013 is:
= 7,476,000
2. Number of shares used to compute diluted earnings per share for the year ended December 31, 2013 is:
7,776,000
3. Adjusted Net Income to be used as the numerator in the basic earnings per share calculation for the year ended December 31, 2013:
= $10,650,000
Explanation:
a) Data and Calculations:
After-tax net income for 2013 = $11,550,000
July 1, 2012: Convertible preferred stock = 700,000
Cumulative dividend = 12% ($3/$25)
April 1 Converted preferred stock = (400,000)
Outstanding convertible preferred stock 300,000
Common Stock
December 31, 2012 Outstanding = 2,000,000
April 1 Converted preferred stock = 400,000
July 1 2-for-1 split 4,800,000
August 1 Factory building 300,000
November 1 Treasury Stock (24,000)
Outstanding common stock shares 7,476,000
Outstanding convertible preferred stock 300,000
Total shares for diluted earnings per share = 7,776,000
Adjusted Net Income:
After-tax net income for 2013 = $11,550,000
Preferred stock dividends 900,000
Adjusted net income = $10,650,000
