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ASHA 777 [7]
3 years ago
5

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconve

rtible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income for the year ended December 31, 2021, was $2,100,000. The income tax rate is 25%. As part of an incentive compensation plan, Dow granted incentive stock options to division managers at December 31 of the current and each of the previous two years. Each option permits its holder to buy one share of common stock at an exercise price equal to market value at the date of grant and can be exercised one year from that date. Information concerning the number of options granted and common share prices follows: Options Granted
Date Granted (adjusted for the stock dividend) Share Price
December 31, 2019 15,000 $ 16
December 31, 2020 10,000 $ 25
December 31, 2021 13,500 $ 24

The market price of the common stock averaged $24 per share during 2021.

Required:
Compute Dow's earnings per share for the year ended December 31, 2021. (Do not round intermediate calculations. Enter your answers in thousands. Round "Earnings per share" answers to 2 decimal places.)
Business
1 answer:
patriot [66]3 years ago
5 0

Earnings per share (EPS) is $3.00

<u>Explanation:</u>

Net income = $2,100,000

Preferred dividends = $75,000 (as the preferred stock is non cumulative, only include the dividends that are actually paid).

Numerator EPS = $2,100,000 minus $75,000

= $ 2,025,000

Denominator EPS = Weighted average of shares of common stockoutstanding.

1/1 - 12/31 -----600,000 into (12 by 12) = 600,000 into 1.04 = 624,000

2/28 - 12/31 -----60,000 into (10 by 12) = 50,000  into 1.04 = 52,000

7/1 - 12/31 ------(2,000) into (6 by 12) = (1,000)

Weighted average shares =   675,000

EPS = $2,025,000 by 675,000 = $3.00

Earnings per share (EPS) = $3.00

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Answer the following as True or False.
svp [43]

Answer:

1. False

2. True

3. True

Explanation:

In Accounting, declaring and paying a stock dividend only decreases Retained Earnings but not Stockholders' Equity on the balance sheet because it has no effect on the cash position of an organization.

5 0
3 years ago
Banks helped international trade by allowing merchants access to money in different locations. please select the best answer fro
Bogdan [553]

The Given Statement is TRUE. Banks helped international trade by allowing merchants access to money in different locations.

<h3>What is International Trade?</h3>

International Trade is the exchange of goods and services across international borders. It usually comes with additional risks caused by changes in exchange rates, government policies, laws, judicial systems, and financial markets.

International trade drives a country’s growth. Import-export figures are one of the top contributors to a country’s gross domestic product. Thus, every country tries to strengthen its global trade relationships with world leaders.

<h3>What is the role of the banks in International Trade?</h3>

Banks facilitate international trade by providing financing and guarantees to importers and exporters. While access to external funds is important for domestic production, it is especially important for exporting firms.

<h3>What did a Merchant do?</h3>

Merchants were those who bought and sold goods, while landowners who sold their own produce were not classed as merchants.

Thus, we can conclude that the above statement is TRUE.

Learn more about International Trade on:

brainly.com/question/15115779

#SPJ4

4 0
2 years ago
Another bank is also offering favorable terms, so Rahul decides to take a loan of $14,000 from this bank. He signs the loan cont
nikklg [1K]

Answer: $14,426.43

Explanation:

At the end of 4 months and assuming a  12 months and 365 days in a year, the formula to be used to calculate how much Rahul owes is;

We use the formula:

Amount owed = Present Value ( 1 + rate/365 ) ^ 365 * time period

Amount owed = 14,000 * ( 1 + 0.09/365 ) ^ (365 *4/12 )

Amount owed  = $14,426.43

3 0
3 years ago
According to the midpoint method, the price elasticity of demand between points A and B is approximately (0, 0.6, 1.67, 22.5) .
kvv77 [185]

Because the demand between points A and B is inelastic, a $25-per-bike increase in price will lead to an increase, in total revenue per day.

in order for a price decrease to cause a decrease in total revenue, demand must be inelastic.

<h3>What is the price elasticity of demand? </h3>

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

When the coefficient of elasticity is less than one, it means that demand is inelastic. When demand is inelastic, it means that the quantity demanded is not sensitive to changes in price.

Price elasticity of demand = midpoint change in quantity demanded / midpoint change in price  

Midpoint change in quantity demanded = change in quantity demanded / average of both demands

  • change in quantity demanded = 40 - 35 = 5
  • Average of both demands = (40 + 35) / 2 = 37.50
  • Midpoint change in quantity demanded = 5 / 37.50 = 0.133

Midpoint change in price = change in price / average of both price

  • Change in price = 100 - 125 = -25
  • Average of both prices = (100 + 125) / 2 = 112.50
  • Midpoint change in price = -25 / 112,50 = -0,222

Midpoint elasticity of demand =  0.133 /  -0,222 = 0.6

To learn more about price elasticity of demand, please check: brainly.com/question/18850846

7 0
2 years ago
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided
il63 [147K]

Answer:

What journal entry did Pincus record to write off uncollectible accounts during 2021

In 2021, the company wrote off uncollectible accounts of $10,800.  

Dr Allowance for Uncollectible Accounts $ 10,800

Cr Accounts receivable $ 10,800

and to recognize bad debt expense for 2021?

Pincus estimates that 5% of the accounts receivable balance at 12/31/2021 will prove uncollectible  

Dr Bad Debt Expense $ 1,520

Cr Allowance for Uncollectible Accounts $ 1,520

Explanation:

Pincus provided a total of $268,000 of services on account  

Dr Accounts receivable $ 268,000  

Cr Sales $ 268,000  

In 2021, the company wrote off uncollectible accounts of $10,800.    

Dr Allowance for Uncollectible Accounts $ 10,800  

Cr Accounts receivable $ 10,800  

If the company use the allowance method to account for bad debts, at the moment of the write off the company debits the Allowance for Uncollectible Accounts that was previously estimated with a credit to account receivable, to reflect the new accounts receivable balance.

By the end of 2021, cash collections on accounts receivable totaled $226,800  

Dr CASH $ 226,800  

Cr Accounts receivable $ 226,800  

BALANCE  

Dr Accounts receivable $ 30,400  

Pincus estimates that 5% of the accounts receivable balance at 12/31/2021 will prove uncollectible  

Dr Bad Debt Expense $ 1,520  

Cr Allowance for Uncollectible Accounts $ 1,520  

5 0
4 years ago
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