000 SHARES OF COMMON STOCK AND 2,000 SHARES OF 8%, $90 PAR PREFERRED...

5,000 shares of common stock and 2,000 shares of 8%, $90 par preferred stock outstanding during the whole year.During the year, Barnstabur issued at par, $60,000 of 6.0% convertible bonds, with each of the 60 bonds convertible into 110shares of the Barnstabur common stock.If Barnstabur's effective tax rate is 40%, what will Barnstabur report for diluted earnings per share (EPS)?غ A)$1.66.ض B)$1.53.غ C)$2.36.ExplanationDiluted EPS = adjusted earnings after conversion (EAC) / weighted average plus potential common shares outstanding.Step 1: Calculate Adjusted EACadjusted EAC: net income - preferred dividends+ after-tax interest on convertible debt= adjusted earnings available for common sharespreferred dividends = (0.08)(90)(2,000) = 14,400

convertible debt interest = (60,000)(0.06)(1 - 0.40) = 2,160

adjusted EAC = (30,000 - 14,400 + 2,160) = $17,760

Step 2: Calculate Weighted average plus potential common shares outstanding.weighted average common shares = 5,000shares from conversion of convertible bonds = (60 × 110) = 6,600weighted ave. plus potential common shares outst. =11,600Step 3: Calculate Diluted EPSDiluted EPS = 17,760 / 11,600 = $1.53.

Question #2 of 90

Question ID: 414123

A firm has a weighted average number of 20,000 common shares selling at an average of $10 throughout the year and 11,000, 10%, $100par value preferred shares. If the firm earns $210,000 after taxes, what is its Basic EPS?$10.50 / share.غ B)$7.50 / share.ض C)$5.00 / share.(210,000 − 110,000) / 20,000 = $5 share

Question #3 of 90

Question ID: 414121

Last year, the AKB Company had net income equal to $5 million. Combined state and local taxes were 45%. The firm paid $1million to holders of its 1 million common shares and $250,000 to 100,000 preferred shareholders. What was AKB's earnings pershare (EPS) last year?$2.25.$4.75.$2.50.EPS = earnings available to common shareholders divided by the weighted average number of common shares outstanding.Earnings available to common shareholders is net income minus preferred dividends, or $4,750,000 (= $5 million - 250,000) forAKB.

Question #4 of 90

Question ID: 414154

For an organization with a simple capital structure, the computation of earnings per share is least likely to consider:net income.the weighted average number of preferred shares outstanding.the weighted average number of common shares outstanding.The equation for Basic EPS (net income - preferred dividends / weighted average number of common shares outstanding) doesnot include the number of preferred shares outstanding, because the objective is to determine the earnings available to thecommon shareholder.

Question #5 of 90

Question ID: 414088

The JME Jumpers, a professional volleyball team, sells season tickets to all home games. The cost of a season ticket is $1,000and the team plays 20 home games, which run from April through August. For the year ended June 30, 2005, JME sold 1,200tickets, collected 80 percent of the amount owed, and played 12 home games. How much revenue should JME recognize?$1,200,000.$720,000.$960,000.(1,200 × $1,000 × 12/20) = $720,000

Question #6 of 90

Question ID: 414134

The ZZT Company went public on June 1, 2004, by issuing 25 million shares of common stock. In 2005, the firm raised additionalcapital by issuing 2 million shares of preferred stock. What is the weighted average number of common shares outstanding forthe year ending December 31, 2005?