Accounting 313 Handout Problem Earnings Per Share Complex Structure 1. The following selected information is for the Parson Corp. on Dec. 31. 2000 (at the end of 2000): 10% Convertible Bonds, due on Jan. 1, 2008, (each $1,000 bond is convertible into 30 shares of common stock] 10% Noncumulative Preferred Stock, S50 par, 30,000 shares $10,000,000 authorized; 10,000 shares issued & outstanding 500,000 8% Cumulative Convertible Preferred Stock, S75 par, 50,000 shares authorized; 8,000 shares issued & outstanding (each share of preferred stock is convertible into five shares of common stock] 600,000 Common Stock, S6 par, 800,000 shares authorized; 240,000 shares issued and outstanding 1,440,000 Additional Information: (a) During 2000, Parson reported $884,000 of net income, paid common shareholders a dividend of $1.00 per share, and operated in the 40% tax bracket. (b) During 2000, Parson had the following common stock transactions: March 1: Acquired 30,000 shares of treasury stock July 1: Reissued the 30,000 shares of treasury stock Oct.. 1: Issued 60,000 shares of common stock (c) The bonds were issued on Jan. 1, 1984, at a discount. This "discount" account had a Jan. 1, 2000, balance of $400,000. (d) The convertible preferred stock was issued in 1980 for $100 per share. (e) Stock options had been granted in 1997 for 30,000 shares of common stock at an option price of $25 per share. These rights are still outstanding and exercisable. (1) Market prices for Parson common stock in 2000 were as follows: Average for the Year, $30.00; Fourth Quarter Average, $37.50; Dec 31, 2000, 532.00 (g) On Jan. 1, 2000, a contingent issuance was issued to the CEO of company. This agreement states that if the company averages Net Income of $2,000,000 per year for the three-year period, 2000-2002, the president of the company will receive 40,000 shares of common stock. Required: Very clearly showing all of your work [including any checks that you might have made). compute Parson's basic and diluted earning per share for 2000. Accounting 313 Handout Problem Earnings Per Share Complex Structure 1. The following selected information is for the Parson Corp. on Dec. 31. 2000 (at the end of 2000): 10% Convertible Bonds, due on Jan. 1, 2008, (each $1,000 bond is convertible into 30 shares of common stock] 10% Noncumulative Preferred Stock, S50 par, 30,000 shares $10,000,000 authorized; 10,000 shares issued & outstanding 500,000 8% Cumulative Convertible Preferred Stock, S75 par, 50,000 shares authorized; 8,000 shares issued & outstanding (each share of preferred stock is convertible into five shares of common stock] 600,000 Common Stock, S6 par, 800,000 shares authorized; 240,000 shares issued and outstanding 1,440,000 Additional Information: (a) During 2000, Parson reported $884,000 of net income, paid common shareholders a dividend of $1.00 per share, and operated in the 40% tax bracket. (b) During 2000, Parson had the following common stock transactions: March 1: Acquired 30,000 shares of treasury stock July 1: Reissued the 30,000 shares of treasury stock Oct.. 1: Issued 60,000 shares of common stock (c) The bonds were issued on Jan. 1, 1984, at a discount. This "discount" account had a Jan. 1, 2000, balance of $400,000. (d) The convertible preferred stock was issued in 1980 for $100 per share. (e) Stock options had been granted in 1997 for 30,000 shares of common stock at an option price of $25 per share. These rights are still outstanding and exercisable. (1) Market prices for Parson common stock in 2000 were as follows: Average for the Year, $30.00; Fourth Quarter Average, $37.50; Dec 31, 2000, 532.00 (g) On Jan. 1, 2000, a contingent issuance was issued to the CEO of company. This agreement states that if the company averages Net Income of $2,000,000 per year for the three-year period, 2000-2002, the president of the company will receive 40,000 shares of common stock. Required: Very clearly showing all of your work [including any checks that you might have made). compute Parson's basic and diluted earning per share for 2000