Solution-How calculate basic EPS and Diluted EPS

How calculate basic EPS and Diluted EPS

Reference no: EM132437621

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	$55,000	$35,000
Accounts Receivable	101,000	81,000
Inventory	250,000	135,000
Land	95,000	65,000
Buildings and Equipment	520,000	350,000
Less: Accumulated Depreciation	(250,000)	(130,000)
Investment in Short Retail Stores	136,000
Total Assets	$907,000	$536,000
Liabilities and Equity
Accounts Payable	$87,000	$66,000
Bonds Payable	260,000	200,000
Preferred Stock ($10 par value)	200,000	100,000
Common Stock:
$10 par value	150,000
$5 par value		100,000
Retained Earnings	210,000	70,000
Total Liabilities and Equity	$907,000	$536,000

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 $50,000 for 20X4 and paid dividends of $30,700.

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 $100,000 in 20X4 and paid dividends of $69,000. The companies file separate tax returns and are subject to a 40 percent income tax.

Required - How calculate basic EPS and Diluted EPS and what are they?

Reference no: EM132437621

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How calculate basic EPS and Diluted EPS

Reference no: EM132437621

Reference no: EM132437621

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