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EPS for 2017 Basic Diluted Number of shares used in EPS computation 90,000 140,000 Earnings used in EPS computation $261,000 $333,000 Earnings per share $ 2.90 $ 2.38

Information concerning the capital structure of the Petrock Corporation is as follows: December 31, 2016 2017 Common stock 90,000 shares 90,000 shares Convertible preferred stock 10,000 shares 10,000 shares 8%, $1,000 par, convertible bonds $1,000,000 $1,000,000 During 2017, Petrock paid dividends of $1 per share on its common stock and $2.40 per share on its preferred stock. The preferred stock is convertible into 20,000 shares of common stock. The 8% convertible bonds are convertible into 30,000 shares of common stock. The net income for the year ending December 31, 2017, was $285,000, and the company's income tax rate was 40%. Required: 1. What was basic EPS for 2017? 2. What was diluted EPS for 2017?

Number of preferred shares issued 17,000 Number of common shares issued 60,000 Explanation The number of preferred shares issued can be found by dividing the balance in the preferred stock, par value account by the $15 per share par value: $255,000/$15 = 17,000 shares issued The number of common stock shares issued can be found by dividing the balance in the common stock account by the $5 per share stated value: $300,000/$5 = 60,000 shares assuming the shares were issued at this stated value

Munn Corporation's records included the following stockholders' equity accounts: Preferred stock, par value $15, authorized 20,000 shares $255,000 Additional paid-in capital—preferred stock 15,000 Common stock, no par, $5 stated value, 100,000 shares authorized 300,000 Required: How many shares of preferred stock and how many shares of common stock have been issued?

Total shareholders' equity $ 3,290,000

Newton Corporation was organized on January 1, 2017. On that date, it issued 200,000 shares of its $10 par-value common stock at $15 per share (400,000 shares were authorized). During the period from January 1, 2017, through December 31, 2019, Newton reported net income of $750,000 and paid cash dividends of $380,000. On January 5, 2019, Newton purchased 12,000 shares of its common stock at $12 per share. On December 31, 2019, the company sold 8,000 treasury shares at $8 per share. Required: What is the book value of total shareholders' equity as of December 31, 2019?

No Transaction General Journal Debit Credit 1 1 Dividend 7,200 Common stock, par 4,500 Additional paid-in capital 2,700 Req 1A Req 1B No Transaction General Journal Debit Credit 1 1 Dividend 7,200 Common stock, par 4,500 Additional paid-in capital 2,700

On December 31, 2017, the Stockholders' Equity section of Mercedes Corporation was as follows: Common stock, par value $5; authorized 30,000 shares; issued and outstanding, 9,000 shares $ 45,000 Additional paid-in capital 58,000 Retained earnings 73,000 Total stockholders' equity $ 176,000 On March 1, 2018, the board of directors declared a 10% stock dividend and accordingly issued 900 additional shares. The stock's fair value at that time was $8 per share. For the three months ended March 31, 2018, Mercedes sustained a net loss of $16,000. Required: 1a. Prepare the journal entry for the stock dividend. 1b. What amount should the company report as retained earnings on its quarterly financial statement dated March 31, 2018?

Earnings per common share $ 0.82 Explanation Basic EPS = (Net income − Preferred dividends) Weighted-average common shares outstanding 10,000 common shares were issued and outstanding the full year, and another 2,000 shares were issued on July 1. So the weighted-average common shares outstanding is 10,000 + 2,000 × 1/2 year = 11,000 shares. This means: Basic EPS = $10,000 − $1,000/11,000= $0.82 per share

Tam Company's net income for the year ending December 31, 2017, was $10,000. During the year, Tam declared and paid $1,000 cash dividends on preferred stock and $1,750 cash dividends on common stock. At December 31, 2017, the company had 12,000 shares of common stock issued and outstanding—10,000 had been issued and outstanding throughout the year and 2,000 were issued on July 1, 2017. No other common stock transactions occurred during the year, and the 5,000 shares of preferred stock are not convertible into common shares. Required: What should be the 2017 earnings per common share of Tam Company

Additional paid-in capital $ 2,400,000 Retained earnings $ 800,000 Because the shares are "retired" rather than "held in treasury," they are removed from the books of Peter Corporation. No gain or loss is recorded because the transaction involves owners, not "outsiders." The journal entry to record the repurchase is: DR Common stock par (100,000 shares × $10) $1,000,000 DR Additional paid-in capital 300,000* DR Retained earnings 500,000* CR Cash $1,800,000 *The original APIC is reduced for retired shares according to the original issue amount: 100,000 shares × $3 (APIC $2,700,000/900,000 shares). Retained earnings is reduced for the remaining $500,000. The account balances after this entry are: Common stock par (800,000 shares × $10) $8,000,000 Additional paid-in capital ($2,700,000 less $300,000) 2,400,000 Retained earnings ($1,300,000 less $500,000) 800

The stockholders' equity section of Peter Corporation's balance sheet at December 31, 2017, follows: Common stock ($10 par value); authorized 1,000,000 shares, issued and outstanding 900,000 shares $ 9,000,000 Additional paid-in capital 2,700,000 Retained earnings 1,300,000 Total stockholders' equity $13,000,000 On January 2, 2018, Peter purchased and retired 100,000 shares of its stock for $1,800,000. Required: What is the balance in the Additional paid-in capital and Retained earnings accounts immediately after the shares were retired?

Balance in Additional paid-in capital $ 275,000 Explanation The capital transactions are described in the following schedule: Common Stock Accounts Cash Par APIC Treasury 1/05/17: issued 100,000 shares at $5 each $ 500,000 $500,000 4/06/17: issued 50,000 shares at $7 each 350,000 250,000 $100,000 6/08/17: issued 15,000 shares at $10 each 150,000 75,000 75,000 7/28/17: purchased 25,000 shares at $4 each (100,000) $(100,000) 12/31/17: sold 25,000 treasury shares at $8 each 200,000 100,000 100,000 Balance at 12/31/2017 $1,100,000 $825,000 $275,000 $ 0

Warren Corporation was organized on January 1, 2017, with an authorization of 500,000 shares of common stock ($5 par value per share). During 2017, the company had the following capital transactions: January 5 Issued 100,000 shares at $5 per share April 6 Issued 50,000 shares at $7 per share June 8 Issued 15,000 shares at $10 per share July 28 Purchased 25,000 shares at $4 per share December 31 Sold 25,000 shares held in treasury at $8 per share Required: What should be the balance in the Additional paid-in capital account at December 31, 2017?

Common stock—par $ 4,800,000 Additional paid-in capital 19,200,000 Treasury stock (3,400,000) Total shareholders' equity $ 20,600,000 Explanation Common stock—par: $4,800,000 = (2,500,000 shares less 100,000 shares retired) × $2 par per share Additional paid-in capital: $19,200,000 = (2,500,000 shares less 100,000 shares retired) × ($10 per share issue price minus $2 per share assigned to par value) Treasury stock: $3,400,000 = 200,000 shares × $17 per share repurchase price

Weldon Wire has issued 2,500,000 shares of $2 par common stock at an average price of $10 per share. Of these, 100,000 shares were repurchased during the year for $15 each and retired. Another 200,000 shares of the shares were repurchased for $17 each and are being held for later use. There were no other common stock transactions during the year. Required: Determine the balance in each of the following shareholders' equity accounts: Common stock—par; Additional paid-in capital; and Treasury stock.