intermediate Financial Reporting II

Problem D-7 Basic and Diluted Earnings per Share 10 Mark 1he following data relate to Schroeder Ltd. for the calendar year 2020: Net income (30% tax rate) $3,250,000 Average number of common shares outstanding during 2020.. 1.200.000 shares 8%. cumulative convertible preferred shares." convertible into 90. 000 common shares... $1,800,000 6% convertible bonds: convertible into 60. one common shares... $2.000.000 Stock options. exercisable at $30 per Osharem. 105,000 shares All the convertible securities and stock options were outstanding all year. The average market price of the common shares in 2020 was $35. Instructions Calculate: a. basic earnings per share b. diluted earnings per share. Problem D-B Long-Term Liabilities 10 Mark 1. On March 31. 2016. Peppermint Patty Corp. sold $1,000.000 (par value) 8%. 10-year bonds for $961,500 including accrued interest. The bonds were dated January 1. 2016. Interest is paid semi-annually on January 1 and July 1. On April 1. 2020, Peppermint Patty purchased half of the bonds on the open market at 99 plus accrued interest and retired thorn. The corporation uses the straigtt-Iine method for amortization of bond premiums and dscou nts a. Calculate the amount of the gain or loss on retirement of the bonds Copyright '- 2019 John Wliey & Sons Canada, Ltd Unauthorized copying. distribution. or transmission d thls page :5 prohlbiled b. Prepare the journal entries required on April 1. 2020 to record retirement of the bonds. Assume that interest and premium or discount amortization have been recorded through January 1. 2020. c. Prepare the journal entry on July 1. 2020 to record interest and premium or discount amortization. 2. On January 1 of the current year, Franklin Ltd. issued $500,000 (par value) 10%, six year bonds when the market rate was 9%, receiving $522,430 cash proceeds. Interest is payable annually on December 31. The corporation uses the ell'ective interest method for amortization of bond premium or discount. a. Calculate the interest expense for the rst year. b. Calculate the interest expense for the second year. 3. On July 1. 2020. Peanuts Inc. issued $400,000 (par value) 10%. ten year bonds, with interest payable semi-annually on January 1 and July 1. The bonds were issued at $454,360 to yield 8%. The corporation uses the effective interest method for amortization of bond premium or discount. a. Prepare the journal entry on the date the bonds were issued. b. Prepare the adjusting entry at December 31, 2020. the end at the scal year. c. Prepare the entry for the interest payment on January 1. 2021