Reference no: EM132967953
Question - Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies' balance sheets as of December 31, 20X4, were as follows:
Punch Manufacturing Corporation Short Retail Stores
Assets Cash $52,000 $32,000
Accounts Receivable 105,000 85,000
Inventory 250,000 125,000
Land 115,000 85,000
Buildings and Equipment 510,000 320,000
Less: Accumulated Depreciation (245,000) (145,000)
Investment in Short Retail Stores 128,000
Total Assets $915,000 $502,000
Liabilities and Equity Accounts Payable $75,000 $52,000
Bonds Payable 280,000 200,000
Preferred Stock ($10 par value) 200,000 90,000
Common Stock: $10 par value 150,000 $5 par value 100,000
Retained Earnings 210,000 60,000
Total Liabilities and Equity $915,000 $502,000
Short Retail's 8 percent preferred stock is convertible into 14,000 shares of common stock, and its 10 percent bonds are convertible into 8,000 shares of common stock. Short reported net income of $51,000 for 20X4 and paid dividends of $30,500. Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reported after-tax income, excluding investment income from Short, of $125,000 in 20X4 and paid dividends of $70,000. The companies file separate tax returns and are subject to a 40 percent income tax.
Required - Compute basic and diluted EPS for the consolidated entity.