The Jamison Company lists the following stockholders equity items on 12 31 20 6 Preferred Stock, $100 par, 50,000 shares authorized, 10,000 shares issued $1,000,000 Common Stock, $10 par, 500,000 shares authorized, 235,000 shares issued 2,350,000 Paid in Capital in excess of par Preferred 600,000 Paid in Capital in excess of par Common 1,640,000 Paid in Capital Treasury Stock Transactions 15,000 Paid in Capital Stock Options 20,000 Retained Earnings 967,820 Less Treasury stock (3,000 shares at cost) (36,000) Total Stockholders Equity $6,556,820 The following information is also available Net income for 2020 was $454,700 The market price of the common stock at 12 31 20 is $25 30 per share, and the market price of the preferred stock is $105 The average price of the common stock during 2020 was $24 70 Jamisons income tax rate for 2020 is 21 There was no change in the number of common shares outstanding for 2020 On 1 1 20, Jamison established a stock option plan for certain key executives Five executives were each given the right to purchase 2,000 shares of Jamison common stock at a price of $20 The market price of the common stock on the date of grant was $20 00 and the market value of the options is $4 The options may be exercised any time after 1 1 20, and the executives must be in Jamisons employ at the time of exercise The service period is considered to be two years Jamisons preferred stock is cumulative and convertible Each share of preferred stock is convertible into 4 shares of common stock In addition to the dilutive equity securities discussed above, Jamison had two issues of convertible bonds outstanding for the period Jamison had $1,500,000 of 7 convertible bonds The bonds were issued at par Each $1,000 bond is convertible into 32 shares of common stock Jamison also had $1,000,000 of 6 convertible bonds Bond interest expense each year is reduced by $500 amortization of the premium Each $1,000 bond is convertible into 30 shares of common stock Required Compute Jamisons earnings per share for 2020 Show the income statement presentation of Jamisons earnings per share Prepare the required disclosure for earnings per share, as it might appear in Jamisons annual report

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Posted on Aug 12, 2024

The Jamison Company lists the following stockholders equity items on 12/31/20:

6% Preferred Stock, $100 par, 50,000 shares authorized,

10,000 shares issued $1,000,000

Common Stock, $10 par, 500,000 shares authorized,

235,000 shares issued 2,350,000

Paid-in Capital in excess of par - Preferred 600,000

Paid-in Capital in excess of par - Common 1,640,000

Paid-in Capital - Treasury Stock Transactions 15,000

Paid-in Capital - Stock Options 20,000

Retained Earnings 967,820

Less: Treasury stock (3,000 shares at cost) (36,000)

Total Stockholders Equity $6,556,820

The following information is also available:

The market price of the common stock at 12/31/20 is $25.30 per share, and the market price of the preferred stock is $105. The average price of the common stock during 2020 was $24.70.

On 1/1/20, Jamison established a stock option plan for certain key executives. Five executives were each given the right to purchase 2,000 shares of Jamison common stock at a price of $20. The market price of the common stock on the date of grant was $20.00 and the market value of the options is $4. The options may be exercised any time after 1/1/20, and the executives must be in Jamisons employ at the time of exercise. The service period is considered to be two years.

Jamisons preferred stock is cumulative and convertible. Each share of preferred stock is convertible into 4 shares of common stock.

In addition to the dilutive equity securities discussed above, Jamison had two issues of convertible bonds outstanding for the period:

Jamison had $1,500,000 of 7% convertible bonds. The bonds were issued at par. Each $1,000 bond is convertible into 32 shares of common stock.

Jamison also had $1,000,000 of 6% convertible bonds. Bond interest expense each year is reduced by $500 amortization of the premium. Each $1,000 bond is convertible into 30 shares of common stock.

Required:

Compute Jamisons earnings per share for 2020.
Show the income statement presentation of Jamisons earnings per share.
Prepare the required disclosure for earnings per share, as it might appear in Jamisons annual report.