View Policies Current Attempt in Progress An excerpt from the statement of financial position of Sheridan Limited follows: SHERIDAN LIMITED Selected Statement of Financial Position Information At December 31, 2020 Long-term debt Notes payable, 10% $5,279,000 4% convertible bonds payable 1,972,000 6% convertible bonds payable 2,832,000 Total long-term debt $10,083,000 Shareholders' equity $0.69 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 590,300 shares issued and outstanding) $2,951,500 Common shares, no par value (7,361,700 shares authorized, Selected Statement of Financial Position Information At December 31, 2020 Long-term debt Notes payable, 10% $5,279,000 4% convertible bonds payable 1,972,000 6% convertible bonds payable 2,832,000 Total long-term debt $10,083,000 Shareholders' equity $0.69 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 590,300 shares issued and outstanding) $2,951,500 Common shares, no par value (7,361,700 shares authorized, 2,920,900 shares issued and outstanding) 24,007,000 Contributed surplus 218,900 Retained earnings 7,649,200 Total shareholders' equity $34,826,600 Retained earnings 7,644,200 Total shareholders' equity $34,826,600 Notes and Assumptions December 31, 2020 1. Options were granted/written in 2019 that give the holder the right to purchase 105,000 common shares at $8 per share. The average market price of the company's common shares during 2020 was $14 per share. The options expire in 2028 and no options were exercised in 2020. 2. The 4% bonds were issued in 2019 at face value. The 6% bonds were issued on June 1, 2020, at face value. Each bond has a face value of $1,000 and is convertible into 100 common shares. 3. The convertible preferred shares were issued at the beginning of 2020. Each share of preferred is convertible into one common share. 4. 4 The average income tax rate is 25%. 5. The common shares were outstanding during the entire year. 6. Preferred dividends were not declared in 2020. 7. Net income was $2,446,900 in 2020. . 8. No bonds or preferred shares were converted during 2020. 8. No bonds or preferred shares were converted during 2020. Calculate the income effect of the dividends on preferred shares. $ 407307 Dividends on preferred shares e Textbook and Media Calculate basic earnings per share for 2020. (Round answer to 2 decimal places, e.g. 15.25.) Basic EPS $ 0.69 e Textbook and Media e Textbook and Media Determine an incremental per share effect for $0.69 preferred shares. (Round answer to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS $0.69 Preferred shares $ 0.69 407307 $ 0.69 e Textbook and Media Calculate the proceeds from assumed exercise of 105,000 options. $ Proceeds from exercise of options Calculate the incremental shares oustanding upon the exercise of options. e Textbook and Media Determine an incremental per share effect for $0.69 preferred shares. (Round answer to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS $0.69 Preferred shares $ 0.69 407307 $ 0.69 e Textbook and Media Calculate the proceeds from assumed exercise of 105,000 options. $ Proceeds from exercise of options Calculate the incremental shares oustanding upon the exercise of options. $0.69 Preferred shares $ 0.69 407307 $ 0.69 e Textbook and Media Calculate the proceeds from assumed exercise of 105,000 options. $ Proceeds from exercise of options Calculate the incremental shares oustanding upon the exercise of options. The incremental shares oustanding upon the exercise of options e Textbook and Media e Textbook and Media Calculate the after-tax interest paid on the 4% bonds. $ After-tax interest on 4% bonds converted eTextbook and Media Determine an incremental per share effect for 4% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 4% Bonds $ 59160 197200 $ 0.30 Toileele.DM.J. Determine an incremental per share effect for 4% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 4% Bonds $ 59160 197200 $ 0.30 e Textbook and Media Calculate the after-tax interest paid on the 6% bonds. $ After-tax interest on 6% bonds converted eTextbook and Media Determine an incremental per share effect for 6% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Determine an incremental per share effect for 6% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 6% Bonds $ $ eTextbook and Media Rank the potentially dilutive securities from most dilutive to least dilutive. 4% Bonds 6% Bonds Rank 1 Rank 2 Rank 3 Rank 4 Anti-dilutive $0.69 Preferred shares Options Calculate diluted earnings per share for 2020. (Round earnings per share to 2 decimal places, e.g. 15.25.) Numerator Denominator EPS $ $ Basic 4% bonds 6% bonds Options Preferred shares Sub Total Sub Total $ $ $ $ Basic 4% bonds 6% bonds Options Preferred shares Sub Total Sub Total $ $ Diluted EPS View Policies Current Attempt in Progress An excerpt from the statement of financial position of Sheridan Limited follows: SHERIDAN LIMITED Selected Statement of Financial Position Information At December 31, 2020 Long-term debt Notes payable, 10% $5,279,000 4% convertible bonds payable 1,972,000 6% convertible bonds payable 2,832,000 Total long-term debt $10,083,000 Shareholders' equity $0.69 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 590,300 shares issued and outstanding) $2,951,500 Common shares, no par value (7,361,700 shares authorized, Selected Statement of Financial Position Information At December 31, 2020 Long-term debt Notes payable, 10% $5,279,000 4% convertible bonds payable 1,972,000 6% convertible bonds payable 2,832,000 Total long-term debt $10,083,000 Shareholders' equity $0.69 cumulative, no par value, convertible preferred shares (unlimited number of shares authorized, 590,300 shares issued and outstanding) $2,951,500 Common shares, no par value (7,361,700 shares authorized, 2,920,900 shares issued and outstanding) 24,007,000 Contributed surplus 218,900 Retained earnings 7,649,200 Total shareholders' equity $34,826,600 Retained earnings 7,644,200 Total shareholders' equity $34,826,600 Notes and Assumptions December 31, 2020 1. Options were granted/written in 2019 that give the holder the right to purchase 105,000 common shares at $8 per share. The average market price of the company's common shares during 2020 was $14 per share. The options expire in 2028 and no options were exercised in 2020. 2. The 4% bonds were issued in 2019 at face value. The 6% bonds were issued on June 1, 2020, at face value. Each bond has a face value of $1,000 and is convertible into 100 common shares. 3. The convertible preferred shares were issued at the beginning of 2020. Each share of preferred is convertible into one common share. 4. 4 The average income tax rate is 25%. 5. The common shares were outstanding during the entire year. 6. Preferred dividends were not declared in 2020. 7. Net income was $2,446,900 in 2020. . 8. No bonds or preferred shares were converted during 2020. 8. No bonds or preferred shares were converted during 2020. Calculate the income effect of the dividends on preferred shares. $ 407307 Dividends on preferred shares e Textbook and Media Calculate basic earnings per share for 2020. (Round answer to 2 decimal places, e.g. 15.25.) Basic EPS $ 0.69 e Textbook and Media e Textbook and Media Determine an incremental per share effect for $0.69 preferred shares. (Round answer to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS $0.69 Preferred shares $ 0.69 407307 $ 0.69 e Textbook and Media Calculate the proceeds from assumed exercise of 105,000 options. $ Proceeds from exercise of options Calculate the incremental shares oustanding upon the exercise of options. e Textbook and Media Determine an incremental per share effect for $0.69 preferred shares. (Round answer to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS $0.69 Preferred shares $ 0.69 407307 $ 0.69 e Textbook and Media Calculate the proceeds from assumed exercise of 105,000 options. $ Proceeds from exercise of options Calculate the incremental shares oustanding upon the exercise of options. $0.69 Preferred shares $ 0.69 407307 $ 0.69 e Textbook and Media Calculate the proceeds from assumed exercise of 105,000 options. $ Proceeds from exercise of options Calculate the incremental shares oustanding upon the exercise of options. The incremental shares oustanding upon the exercise of options e Textbook and Media e Textbook and Media Calculate the after-tax interest paid on the 4% bonds. $ After-tax interest on 4% bonds converted eTextbook and Media Determine an incremental per share effect for 4% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 4% Bonds $ 59160 197200 $ 0.30 Toileele.DM.J. Determine an incremental per share effect for 4% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 4% Bonds $ 59160 197200 $ 0.30 e Textbook and Media Calculate the after-tax interest paid on the 6% bonds. $ After-tax interest on 6% bonds converted eTextbook and Media Determine an incremental per share effect for 6% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Determine an incremental per share effect for 6% bonds. (Round earnings per share to 2 decimal places, e.g. 15.25.) Incremental Numerator Effect Incremental Denominator Effect Potentially dilutive security EPS 6% Bonds $ $ eTextbook and Media Rank the potentially dilutive securities from most dilutive to least dilutive. 4% Bonds 6% Bonds Rank 1 Rank 2 Rank 3 Rank 4 Anti-dilutive $0.69 Preferred shares Options Calculate diluted earnings per share for 2020. (Round earnings per share to 2 decimal places, e.g. 15.25.) Numerator Denominator EPS $ $ Basic 4% bonds 6% bonds Options Preferred shares Sub Total Sub Total $ $ $ $ Basic 4% bonds 6% bonds Options Preferred shares Sub Total Sub Total $ $ Diluted EPS