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Dafna1 [17]
3 years ago
6

On January 2, 2018, Bonita Industries issued at par $2020000 of 5% convertible bonds. Each $1000 bond is convertible into 10 sha

res of common stock. No bonds were converted during 2018. Bonita had 197000 shares of common stock outstanding during 2018. Bonita’s 2018 net income was $902000 and the income tax rate was 25%. Bonita’s diluted earnings per share for 2018 would be (rounded to the nearest penny
Business
1 answer:
Kryger [21]3 years ago
6 0

Answer:

Bonita’s diluted earnings per share for 2018 would be  $3,80

Explanation:

<em>Step 1 Calculate the Basic Earnings Per Share</em>

Basic Earnings Per Share = Income Attributable to Common Stockholders / Weighted Average Number of Common Stocks

<u>Income Attributable to Common Stockholders</u>

Net income                                                           $902000

<em>less</em> Interest on bonds ($2020000×5%)×75%    ($75,750)

Income Attributable to Common Stockholders $826,250

Basic Earnings Per Share =$826,250 / 197000

                                           =$4,19

<em>Step 1 Calculate the Diluted Earnings Per Share</em>

Diluted Earnings Per Share =<em>Adjusted</em> Income Attributable to Common Stockholders / <em>Adjusted</em> Weighted Average Number of Common Stocks

<u>Adjusted Income Attributable to Common Stockholders</u>

Income Attributable to Common Stockholders $826,250

Add Interest on bonds ($2020000×5%)×75%    ($75,750)

Income Attributable to Common Stockholders $826,250

<u><em>Adjusted</em></u><u> Weighted Average Number of Common Stocks</u>

common stock outstanding                                           197000

add convertible bond ( $2020000/$1000×10 shares) 20200

Weighted Average Number of Common Stocks          217200

Diluted Earnings Per Share = $826,250/217200

                                              = $3,80

<u />

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You are comparing two annuities with equal present values. The applicable discount rate is 6.5 percent. One annuity will pay $2,
MAVERICK [17]

Answer:

the annual payment for the second annuity is $2,130 paid at end of every year

Explanation:

We have following information for 1st annuity:

Rate: 6.5%

Payment (PMT): -$2,000, paid at beginning of every year

Tenor (Nper): 20 years

We use excel to calculate the present value of annuity = PV(rate,Nper,PMT,,1)

=PV(6.5%,20,-2000,,1) = $23,469

Then we calculate the payment for 2nd annuity = PMT(rate,Nper,PV,,0)

=PMT(6.5%,20,23469,,0) = -$2,130

Download xlsx
4 0
3 years ago
On January 1, 2020, the balance sheet of Naperville Company (a sole proprietorship) was as follows.
guapka [62]

Answer:

Explanation:

From the information povided:

(a) To compute the amount of goodwill paid by Chicago Corporation

Particulars                                            Amount ($)

Accounts Receivable                           100000

Inventory                                               170000

Plant & Equipment                               400000

Land                                                        90000

Customer List                                            4000

Trade Names                                          <u> 16000</u>

     NET ASSETS  (A)                             <u>780000</u>

<u />

Current liabilities                                     76000

Non-current liabilities                            <u>160000 </u>

      NET LIABILITIES (B)                        <u> 236000</u>

∴

PURCHASE  CONSIDERATION (A -B)   544000

<u>Less:</u>  Cash Paid                                    <u>  580000</u>

          GODWILL                                    <u>    36000 </u>

<u />

b)

In the books of Chicago Corporation, the Journal Entry to record the purchase of Naperville Company.

Account Name                                       Dr.                      Cr.

Accounts Receivable A/C                  100000

Inventory A/C                                       170000

Plant Equipment  A/C                          400000

Land A/C                                                 90000

Customer List A/C                                    4000

Trade Names A/C                                   16000

Goodwill A/C                                           36000

Current liabilities A/C                                                       76000

Non-Current Liabilities A/C                                             160000

Cash A/C                                                                          580000

c)

The minimum required amount of goodwill that Chicago can amortize by the end of 2020 is $3600.This is because the amortization can take place for a period of 10 years.

<u />

8 0
3 years ago
What is the current value of a future sum of money called?
Dennis_Churaev [7]

<span>Present value is the current value of a future sum of money. Present value of money is used to compute the time value of money. It is also known as ‘present discounted value’ or ‘discounted value.’ It is the worth of money now to be paid in series of payments at a certain interest rate to arrive at the future value.</span>

6 0
3 years ago
What is market power?
Sedbober [7]
I would say the correct answer is B. t<span>he ability of a company to change prices and output like a monopolist. Market power is basically the power of a particular company to manipulate the price of the product and thus affect all other participants, as well as customers. Monopolists have the greatest market power; conversely, in an ideally balanced economy, nobody would have market power. All participants would have equal chances and nobody would dictate the terms to others.</span>
8 0
3 years ago
Which of the following statements is false?
Paul [167]

Answer:

C

Explanation:

C. online retailing and in-store retailing experience similar rates of product return.

3 0
3 years ago
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