Q1)-ABC reported the following capital structure on December 31, 2020, and the related

results of operations for the year then ended:

Preferred shares, $6, cumulative, convertible into common shares at the rate

of two common shares for each share of preferred; 2,000 shares outstanding

all year

$200,000

Common shares, 30,000 shares outstanding on January 1; 10,000 additional

shares issued for cash on September 30

$2,000,000

Income from continuing operations

195,000

Income from discontinued operations

5,000

Net income

$200,000

Show earnings per share of ABC as it should appear on the income statement of the company

for 2015. Show all computations.

Q-2

JMR Ltd. issued $100,000 of 8%, 8 year, non-convertible bond with detachable stock

purchase warrants. KER Corp. purchased the entire issue. Each $1,000 bond carries 10 warrants.

Each warrant entitles KER to purchase one common share for $20. The bond issue sells for 104

exclusive of accrued interest. Shortly after issuance, the warrants trade for $5 each and the

bonds were quoted at 105 ex-warrants. Show the allocation of the proceeds to bonds using the