Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Calculate the EPS for Year 4 and the comparative EPS for Year 3 ? On 1 January Year 4, Mary had 10 million ordinary shares

image text in transcribedCalculate the EPS for Year 4 and the comparative EPS for Year 3 ?

On 1 January Year 4, Mary had 10 million ordinary shares in issue. The following transactions in shares took place during the year. 1 March 1 June A 1 for 5 bonus issue Al for 2 rights issue at $1 per share. The market price of the shares prior to the rights issue was $5. An issue at full market price of 400,000 shares. 1 August In Year 4 Mary made a profit before tax of $3,362,000. It paid ordinary dividends of $1,200,000 and preference dividends of $800,000 on 10% convertible preference shares. These convertible preference shares were issued at the start of Year 4 and are convertible into ordinary shares at the following rates. On 31 December Year 7 20 shares for every $100 of preference shares. On 31 December Year 8 15 shares for every $100 of preference shares. Outstanding share options on 500,000 shares have also existed for several years. These can be exercised at a future date at a price of $3 per share. The average market price of shares in Year 3 was $4 and in Year 4 was $5. On 1 April Year 4 Mary issue $1,000,000 convertible 7% bonds. These are convertible into ordinary shares at the following rates. On 31 December Year 6 30 shares for every $100 of bonds On 31 December Year 7 25 shares for every $100 of bonds On 31 December Year 8 20 shares for every $100 of bonds Tax rate for Year 4 is 25%. The reported EPS for Year 3 was $0.56

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Surviving An OSHA Audit A Managent Guide

Authors: Frank R. Spellman

1st Edition

0367579340, 978-0367579340

More Books

Students also viewed these Accounting questions

Question

Critique why humans fall prey to perceptual illusions.

Answered: 1 week ago

Question

Write down the Limitation of Beer - Lamberts law?

Answered: 1 week ago

Question

Discuss the Hawthorne experiments in detail

Answered: 1 week ago

Question

Explain the characteristics of a good system of control

Answered: 1 week ago

Question

State the importance of control

Answered: 1 week ago