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Comprehensive EPS Problem # 1 The following is the capital structure and partial liabilities of Waterton Waffles Watermelon and Worcestershire Co . at December 3

Comprehensive EPS Problem #1

The following is the capital structure and partial liabilities of Waterton Waffles Watermelon and Worcestershire Co. at December 31, 2023:

Current Liabilities:

Notes Payable $2,000,000

Other various current liabilities 5,000,000$7,000,000

Total Current Liabilities

ong-term Liabilities:

5% Convertible debentures due April 15, 2027

Total long-term debt

$10,000,000$10,000,000

'hareholders' Equity:

$4 Cumulative cohvertible preferred shares, non-par; 1,000,000 shares authorized; 580,000 issued and outstanding $12,000,000

Common Shares, non-par; 10,000,000 shares authorized; 3,490,000 shares issued and outstanding

4,200,000

Contributed Surplus 2,100,000 Retained Earnings 38,250,000$56,100,000 Total paid in Capital & Retained Earnings $50,650,000

Total Shareholders' Equity ... $50,650,000

ADDITIONAL INFORMATION:

a. The 5% convertible debentures were issued at their face value of $10,000,000 in 2021 . The debentures are due in 2027 and until then are convertible into common stock of Waterton W's at the rate of 50 shares for each $500 debenture.

b. The $4 cumulative, convertible preferred shares were issued in 2022 . On July 1,2023 , and on October 1,2023, holders of the preferred shares converted 50,000 and 20,000 preferred shares, respectively, into common shares. Each preferred share is convertible into 2 shares of common stock.

c. On March 1, 2023, Waterton W's issued 400,000 shares of common stock for land and buildings.

d. On April 1, 2023, 300,000 common shares were cancelled.

d. Dividends on the preferred shares have been paid quarterly (March 31, June 30, September 30, & December 31) through December 31, 2023.

e. Stock options were granted/written to the president of the corporation on January 1,2023. Each of the 20,000 options permits the holder to purchase one share of common stock for $10 per share. The options are exercisable at any time after December 31, 2026 (within 10 years). The average market price of the shares during 2023 was $12.50. Waterton W's uses the "Treasury Share method" for accounting for stock options.

f. Net income of Waterton Waffles Watermelon and Worcestershire Co. for the year ended December 31,2023 , was $4,000,000. The income tax rate is 40%, and 10% rate of return after tax is normal for Waterton W's.

REOUIRED: Prepare all required earnings per share data for 2023 in good form. On the following table indicate the fully diluted EPS amount. Show calculations and label them clearly.

\table[[Shares,Income,EPS],[,,,],[,,,],[,,,],[,,,],[,,,],[,,,]]

What would be shown on the December 31, 2023 Income Statement for EPS?

  

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