Question # 5

Barker Inc. reported net income (30% tax rate) of $1,600,000 for calendar 2017, and an average of 500,000 common shares outstanding during the year. Barker issued $2,000,000 par value, 10-year, 9% convertible bonds on January 1, 2015 at a $18,000 discount. The bonds are convertible into 60,000 common shares. Barker uses the straight-line method for amortizing the bond discount.

Instructions

Calculate basic and diluted earnings per share for 2017.

Question # 6

BIRCH CORPORATION

Comparative Statements of Financial Position

December 31

2017 2016

Cash................................................................................ $ 43,000 $ 24,000

Accounts receivable, net.............................................. 31,000 38,000

Inventory....................................................................... 118,000 82,000

Land................................................................................ 120,000 190,000

Building.......................................................................... 200,000 200,000

Accumulated depreciation........................................... (50,000) (40,000)

Equipment..................................................................... 1,030,000 600,000

Accumulated depreciation........................................... (118,000) (94,000)

$1,374,000 $1,000,000

Accounts payable.......................................................... $ 115,000 $ 100,000

4% Bonds payable......................................................... 320,000 -0-

Common shares........................................................... 750,000 750,000

Retained earnings......................................................... 189,000 150,000

$1,374,000 $1,000,000

Additional data:

1. Net income for the year was $84,000.

2. Cash dividends were paid.

3. Land was sold for $80,000.

4. Old equipment was sold for $70,000. This equipment had cost $150,000 and had accumulated depreciation of $60,000 to date of sale. New equipment was purchased to replace it.

Instructions

Prepare a statement of cash flows for calendar 2017, using the indirect method.