The Stockholders Equity section of Alta Companys balance sheet as of December 31, 2011, contains the following:
Question:
The Stockholders’ Equity section of Alta Company’s balance sheet as of December 31, 2011, contains the following:
$2 cumulative preferred stock, $25 par, convertible,
1,600,000 shares authorized, 1,400,000 shares issued,
750,000 converted to common, 650,000 shares outstanding . . . . . . .. . . . . . . . . . . $16,250,000
Common stock, $0.25 par, 15,000,000 shares authorized,
8,800,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,750,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,595,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $91,795,000
Included in Alta Company’s liabilities are 9% convertible subordinated debentures, face value $20,000,000, issued at par in 2010. The debentures are due in 2019 and, until then, are convertible into the common stock of Alta Company at the rate of 60 shares of common stock for each $1,000 debenture. To date, none has been converted. On April 2, 2011, Alta Company issued 1,400,000 shares of convertible preferred stock at $40 per share. Quarterly dividends to December 31, 2011, have been paid on these shares. The preferred stock is convertible into common stock at the rate of two shares of common for each share of preferred. On October 1, 2011, 150,000 shares and on November 1, 2011, 600,000 shares of the preferred stock were converted into common stock.
During July 2010, Alta Company granted options to its officers and key employees to purchase 500,000 shares of the company’s common stock at a price of $20 per share. No options were exercised in 2011. During 2011, dividend payments for the Alta common stock were as follows.
Dividend per Share
First quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.10
Second quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.15
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.10
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.15
The ending market price for the company’s common stock for the year was $25.
Alta Company’s net income for the year ended December 31, 2011, was $12,750,000.
The provision for income tax was computed at a rate of 30%.
Instructions:
Compute basic and diluted EPS for the year ended December 31, 2011.
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Step by Step Answer:
Step 1 x Basic EPS Net income as reported 12750000 Less Preferred dividends paid June 30 1400000 050 700000 Sept 30 1400000 050 700000 Dec 31 650000 0...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
