intermediate accounting fifteenth edition

P16-7

7 P16-7 (Computation of Basic and Diluted EPS) Charles Austin of the controller's office of Thompson orporation was given the assignment of determining the basic and diluted earnings per share values for the year ending December 31, 2015. Austin has compiled the information listed below. 1. The company is authorized to issue 8,000,000 shares of $10 par value common stock. As of December 31, 2014, 2,000,000 shares had been issued and were outstanding. The 2. per share market prices of the common stock on selected dates were as follows. July 1, 2014 January 1, 2015 April 1, 2015 July 1, 2015 August 1, 2015 November 1, 2015 December 31, 2015 Price per Share $20.00 21.00 25.00 11.00 10.50 9.00 10.00 3. A total of 700,000 shares of an authorized 1,200,000 shares of convertible preferred stock had been issued on July 1, 2014. The stock was issued at its par value of $25, and it has a cumulative dividend of $3 per share. The stock is convertible into common stock at the rate of one share of convertible preferred for one share of common. The rate of conversion is to be automatically adjusted for stock splits and stock dividends. Dividends are paid quarterly on September 30, December 31, March 31, and June 30 4, Thompson Corporation is subject to a 40% income tax rate 5. The after-tax net income for the year ended December 31, 2015, was $11,550,000. The following specific activities took place during 2015. 1. January 1-A 5% common stock dividend was issued. The dividend had been declared on December 1, 2014, to all stockholders of record on December 29, 2014