Exercise 16-23 On June 1, 2015, Oriole Company and Waterway Company merged to fo

Question

Exercise 16-23 On June 1, 2015, Oriole Company and Waterway Company merged to form Wildhorse Inc. A total of 846,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis On April 1, 2017, the company issued an additional 625,000 shares of stock for cash. All 1,471,000 shares were outstanding on December 31, 2017 Wildhorse Inc. also issued $600,000 of 20-year, 9% convertible bonds at par on July 1, 2017. Each $1,000 bond converts to 38 shares of common at any interest date. None of the bonds have been converted to date. Wildhorse Inc. is preparing its annual report for the fiscal year ending December 31, 2017. The annual report will show earnings per share figures based upon a reported after-tax net income of $1,651,000. (The tax rate is 40%.) Determine the following for 2017 (a) The number of shares to be used for calculating: (Round answers to O decimal places, e.g. $2,50o.) (1) Basic earnings per share (2) Diluted earnings per share (b) The earnings figures to be used for calculating: (Round answers to 0 decimal places, e.g. $2,500.) (1) Basic earnings per share (2) Diluted earnings per share shares shares LINK TO TEXT VIDEO: SIMILAR EXERCISE

Explanation / Answer

a) Number of shares to be used for calculating: 1) Basic earnings per share: = 846000 + (625000*9/12) = 846000+468750 = 1314750 2) Diluted earnings per share: = 846000 + (625000*9/12) + (((600000/1000)*38)*6/12) = 846000+468750+11400 = 1326150 b) Earnings figures to be used for calculating: 1) Basic earnings per share = $1651000 2) Diluted earnings per share: = $1651000+(($600000*9%*6/12)*(1-0.4)) = $1651000+$16200 = $1667200

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.