Compute the adjusted net income to be used as the numerator

Reference no: EM13571848

Charles Austin of the controller's office of Thompson Corporation was given the assignment of determining the basic and diluted earnings per share values for the year ending December 31, 2013. Austin has compiled the information listed below.

1.		The company is authorized to issue 9,196,800 shares of $10 par value common stock. As of December 31, 2012, 2,299,200 shares had been issued and were outstanding.
2.		The per share market prices of the common stock on selected dates were as follows.

		Price per Share
July 1, 2012		$20
January 1, 2013		21
April 1, 2013		25
July 1, 2013		11
August 1, 2013		10.5
November 1, 2013		9
December 31, 2013		10

3.		A total of 674,400 shares of an authorized 1,230,000 shares of convertible preferred stock had been issued on July 1, 2012. The stock was issued at its par value of $25, and it has a cumulative dividend of $3 per share. The stock is convertible into common stock at the rate of one share of convertible preferred for one share of common. The rate of conversion is to be automatically adjusted for stock splits and stock dividends. Dividends are paid quarterly on September 30, December 31, March 31, and June 30.
4.		Thompson Corporation is subject to a 40% income tax rate.
5.		The after-tax net income for the year ended December 31, 2013, was $12,290,000.

The following specific activities took place during 2013.

1.		January 1-A 5% common stock dividend was issued. The dividend had been declared on December 1, 2012, to all stockholders of record on December 29, 2012.
2.		April 1-A total of 427,200 shares of the $3 convertible preferred stock was converted into common stock. The company issued new common stock and retired the preferred stock. This was the only conversion of the preferred stock during 2013.
3.		July 1-A 2-for-1 split of the common stock became effective on this date. The board of directors had authorized the split on June 1.
4.		August 1-A total of 338,400 shares of common stock were issued to acquire a factory building.
5.		November 1-A total of 26,000 shares of common stock were purchased on the open market at $9 per share. These shares were to be held as treasury stock and were still in the treasury as of December 31, 2013.
6.		Common stock cash dividends-Cash dividends to common stockholders were declared and paid as follows.
		April 15-$0.30 per share
		October 15-$0.20 per share
7.		Preferred stock cash dividends-Cash dividends to preferred stockholders were declared and paid as scheduled.

(a) Determine the number of shares used to compute basic earnings per share for the year ended December 31, 2013. (Round answer to 0 decimal places, e.g. 1,500.)

Number of shares to compute basic earnings per share

(b) Determine the number of shares used to compute diluted earnings per share for the year ended December 31, 2013. (Round answer to 0 decimal places, e.g. 1,500.)

Number of shares to compute diluted earnings per share

(c) Compute the adjusted net income to be used as the numerator in the basic earnings per share calculation for the year ended December 31, 2013.

Adjusted net income

Reference no: EM13571848

Questions Cloud

Sophie is a single taxpayer for the first payroll period in : sophie is a single taxpayer. for the first payroll period in october 2012 she is paid wages of 3250 monthly. sophie

Karen purchased 100 shares of gold corp stock for 10000 on : karen purchased 100 shares of gold corp. stock for 10000 on january 1 2004. on june 1 2014 she sells her 100 shares for

Are war strategies such as the war on drugs or war on : question 1 are war strategies such as the war on drugs or war on terror successful? explain your answer. please use at

On march 1 squire hill company purchased a new stamping : on march 1 squire hill company purchased a new stamping machine with a list price of 48000. the company paid cash for

Compute the adjusted net income to be used as the numerator : charles austin of the controllers office of thompson corporation was given the assignment of determining the basic and

List some of the commodity futures contracts that are : list some of the commodity futures contracts that are traded on exchanges. who do you think could usefully reduce risk

Waco company was started on january 1 2011 when it issued : waco company was started on january 1 2011 when it issued common stock for 15000 cash. also on january 1 2011 the

Is community policing a liberal or conservative approach : question is community policing a liberal or conservative approach? what is the current presidential administrations

Assuming a 43 tax rate compute the earnings per share data : on january 1 2012 bailey industries had stock outstanding as follows.6 cumulative preferred stock 111 par value

User Account

All Pages