P 10-9

[EPS] Computations (subsidiary preferred stock and warrants)

Pam Corporation’s net income for 2016 consists of the following:

Separate income $320,000 Income from Sun Corporation:

80% of Sun’s income to common $160,000 Less: Patent amortization (4,000)

Less: Unrealized profits on equipment sold to Sun (10,000)

Less: 80% of unrealized profit on land purchased from Sun

(16,000) 130,000 Net income $450,000 ADDITIONAL INFORMATION 1. Pam has 100,000 shares of common stock, and Sun has 50,000 shares of common and 10,000 shares of

$10 cumulative, convertible, preferred stock outstanding throughout 2016. The preferred stock is convertible into 30,000 shares of Sun stock.