Reference no: EM133022236

Questions -

Q1. On July 1, 2020, Nehan Corp. issued 4,000 of its no par common shares and 8,000 of its no par preferred shares for a lump sum of $200,000. At this date Nehan's common shares were selling for $24 per share and the preferred shares for $18 per share. Using the relative fair value method, what the amount of the proceeds allocated to the preferred shares account?

a. $120,000.

b. $110,000.

c. $72,000.

d. $100,000.

Q2. During 2020, Neimer Ltd. had 350,000 common shares, 60,000 non-cumulative convertible preferred shares, and $1,200,000 10% convertible bonds outstanding. The preferred shares are convertible into 80,000 common shares. During 2020, Neimer paid dividends of $1.00 per share to the common shares and $1.50 per share to the preferred shares. Each $1,000 bond is convertible into 50 common shares. The net income for 2020 was $1,000,000 and the income tax rate was 30%. Basic earnings per share for 2020 is:

a. $2.60.

b. $3.03.

c. $2.86.

d. $2.04.