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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

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Answer:

price variance  $14,040 U

quantity variance  $ 5,650  F

rate variance          $  10,700  U

efficiency variance  $ 26,800 U

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Missing information attached:

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66 ending + 3,530 used - 46 beginning = 3,510

DIRECT MATERIALS VARIANCES

(standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance

std cost         $25.00

actual cost  $29.00

quantity             3,510 (purchase)

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(standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance

std quantity             3756.00 (939 units x 4 pounds per unit)

actual quantity     3530.00

std cost                       $25.00

difference               226.00

quantity variance  $5,650.00

DIRECT LABOR VARIANCES

(standard\:rate-actual\:rate) \times actual \: hours = DL \: rate \: variance

std rate          $40.00

actual rate  $42.00

actual hours 5,350

difference  $(2.00)

rate variance  $(10,700.00)

(standard\:hours-actual\:hours) \times standard \: rate = DL \: efficiency \: variance

std  hours 4680.00

actual hours 5350.00

std rate  $40.00

difference -670.00

efficiency variance  $(26,800.00)

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