Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Isabelle Leclerc is the controller at Cullumber Pharmaceutical Industries, a public company. She is currently preparing the calculation for basic and diluted earnings per share

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Isabelle Leclerc is the controller at Cullumber Pharmaceutical Industries, a public company. She is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Cullumber's external financial statements. The following is selected financial information for the fiscal year ended June 30, 2020: CULLUMBER PHARMACEUTICAL INDUSTRIES Selected Statement of Financial Position Information \begin{tabular}{lr} June 30,2020 & \\ Long-term debt & \\ Notes payable, 10% & $1,000,000 \\ 7% convertible bonds payable & 5,000,000 \\ 10% bonds payable & 5,000,000 \\ \hline Total long-term debt & $11,000,000 \\ \hline \end{tabular} Shareholders' equity Preferred shares, $4.50 cumulative, 100,000 shares authorized, 25,000 shares issued and outstanding $1,250,000 Common shares, unlimited number of shares \begin{tabular}{cr} authorized, 900,000 shares issued and outstanding & 4,500,000 \\ Contributed surplus-conversion rights & 400,000 \\ Retained earnings & 5,000,000 \\ Total shareholders' equity & $11,150,000 \\ \hline \hline \end{tabular} The following transactions have also occurred at Cullumber: 1. Options were granted by the company in 2018 to purchase 770,000 shares at $15 per share. Although no options were exercised during 2020 , the average price per common share during fiscal year 2020 was $20. 2. Each bond was issued at face value. The 7% convertible debenture will convert into common shares at 45 shares per $1,000 bond. It is exercisable after five years and was issued in 2019. Ignore any requirement to record the bonds' debt and equity components separately. 3. The $4.50 preferred shares were issued in 2018 . 4. There are no preferred dividends in arrears, and preferred dividends were not declared in fiscal year 2020. 5. The 0.9 million common shares were outstanding for the entire 2020 fiscal year. 6. Net income for fiscal year 2020 was $1.6 million, and the average income tax rate was 30%. Calculate the after-tax interest paid on the 7% bonds. After-tax interest on bonds converted eTextbook and Media Determine an incremental per share effect for 7% bonds. (Round earnings per share to 2 decimal places, e.s. 15.25.) eTextbook and Media Rank the potentially dilutive securities from most dilutive to least dilutive. 7% Bonds Options Isabelle Leclerc is the controller at Cullumber Pharmaceutical Industries, a public company. She is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Cullumber's external financial statements. The following is selected financial information for the fiscal year ended June 30, 2020: CULLUMBER PHARMACEUTICAL INDUSTRIES Selected Statement of Financial Position Information \begin{tabular}{lr} June 30,2020 & \\ Long-term debt & \\ Notes payable, 10% & $1,000,000 \\ 7% convertible bonds payable & 5,000,000 \\ 10% bonds payable & 5,000,000 \\ \hline Total long-term debt & $11,000,000 \\ \hline \end{tabular} Shareholders' equity Preferred shares, $4.50 cumulative, 100,000 shares authorized, 25,000 shares issued and outstanding $1,250,000 Common shares, unlimited number of shares \begin{tabular}{cr} authorized, 900,000 shares issued and outstanding & 4,500,000 \\ Contributed surplus-conversion rights & 400,000 \\ Retained earnings & 5,000,000 \\ Total shareholders' equity & $11,150,000 \\ \hline \hline \end{tabular} The following transactions have also occurred at Cullumber: 1. Options were granted by the company in 2018 to purchase 770,000 shares at $15 per share. Although no options were exercised during 2020 , the average price per common share during fiscal year 2020 was $20. 2. Each bond was issued at face value. The 7% convertible debenture will convert into common shares at 45 shares per $1,000 bond. It is exercisable after five years and was issued in 2019. Ignore any requirement to record the bonds' debt and equity components separately. 3. The $4.50 preferred shares were issued in 2018 . 4. There are no preferred dividends in arrears, and preferred dividends were not declared in fiscal year 2020. 5. The 0.9 million common shares were outstanding for the entire 2020 fiscal year. 6. Net income for fiscal year 2020 was $1.6 million, and the average income tax rate was 30%. Calculate the after-tax interest paid on the 7% bonds. After-tax interest on bonds converted eTextbook and Media Determine an incremental per share effect for 7% bonds. (Round earnings per share to 2 decimal places, e.s. 15.25.) eTextbook and Media Rank the potentially dilutive securities from most dilutive to least dilutive. 7% Bonds Options

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

International Standards On Auditing An Institutional Driver For Audit Quality

Authors: Dries Schockaert

1st Edition

2874035467, 978-2874035463

More Books

Students also viewed these Accounting questions

Question

b. What groups were most represented? Why do you think this is so?

Answered: 1 week ago

Question

3. Describe phases of minority identity development.

Answered: 1 week ago

Question

5. Identify and describe nine social and cultural identities.

Answered: 1 week ago