none of these answers are correct $1.74 $1.57 $1.33 $1.78 2 Russell, Inc. acquir
ID: 2446222 • Letter: N
Question
none of these answers are correct
$1.74
$1.57
$1.33
$1.78
2
Russell, Inc. acquired 30% of Dayton Corporation's voting stock on January 1, 2014 for $800,000. During 2014, Dayton earned $320,000 and paid dividends of $200,000. Russell's 30% interest in Dayton gives Russell the ability to exercise significant influence over Dayton's operating and financial policies. During 2015, Dayton earned $400,000 and paid dividends of $120,000 on April 1 and $120,000 on October 1. On July 1, 2015, Russell sold half of its stock in Dayton for $528,000 cash.
What should be the gain on sale of this investment in Russell's 2015 income statement?
None of these answers are correct
$80,000
$110,000
$128,000
$98,000
3
Lakeshore Company purchased $2,000,000 of 8%, 5-year bonds from Rondon, Inc. on January 1, 2014, with interest payable on July 1 and January 1. The bonds sold for $2,083,160 at an effective interest rate of 7%. Using the effective-interest method, Lakeshore Company decreased the Available-for-Sale Debt Securities account for the Rondon, Inc. bonds on July 1, 2014 and December 31, 2014 by the amortized premiums of $7,080 and $7,320, respectively.
At December 31, 2014, the fair value of the Rondon, Inc. bonds was $2,120,000. What should Lakeshore Company report as other comprehensive income and as a separate component of stockholders' equity?
$14,400
No entry should be made
None of these answers are correct
$51,240
$36,840
4
Russell Company purchased $900,000 of 8%, 5-year bonds from Carpenter, Inc. on January 1, 2014, with interest payable on July 1 and January 1. The bonds sold for $937,422 at an effective interest rate of 7%. Using the effective interest method, Russell Company decreased the Available-for-Sale Debt Securities account for the Carpenter, Inc. bonds on July 1, 2014 and December 31, 2014 by the amortized premiums of $3,186 and $3,294, respectively.
At February 1, 2015, Russell Company sold the Carpenter bonds for $927,000. After accruing for interest, the carrying value of the Carpenter bonds on February 1, 2015 was $930,375. Assuming Russell Company has a portfolio of available-for-sale debt investments, what should Russell Company report as a gain (or loss) on the bonds?
($26,433)
($19,683)
($3,375)
$0
None of these answers are correct
Explanation / Answer
Earning available for common stock = Net income - Prefred stock dividend
Earning available for common stock = 300000 - 15000*1.5
Earning available for common stock = 277500
Diluted earnings per share = (Earning available for common stock + Dividend on convertible prefered stock dividend + Interest on convertible bond after tax)/(Weighted avg no of common stock + No of common stock from Convertible prefered stock + No of common stock from Convertible bond)
Diluted earnings per share = (277500 + 1.5*15000 + 2400000*6%*(1-30%))/(150000+30000+75000)
Diluted earnings per share = 1.57
Answer
$1.57
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