Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies' balance sheets as ofDecember 31, 20X4, were as follows:AssetsCashAccounts ReceivableInventoryLandBuildings and EquipmentLess: Accumulated DepreciationInvestment in Short Retail Stores.Total AssetsLiabilities and EquityAccounts PayableBonds PayablePreferred Stock ($10 par value)Common Stock:$10 par value$5 par valueRetained EarningsTotal Liabilities and EquityPunch ManufacturingCorporation$ 55,000102,000250,000110,000510,000(225,000)128,000$ 930,000$ 100,000280,000200,000Basic earnings per shareDiluted earnings per share150,000200,000$ 930,000ShortRetail Stores$ 35,00082,000130,00080,000320,000(145,000)$ 502,000$62,000200,00080,000100,00060,000$ 502,000Short Retail's 8 percent preferred stock is convertible into 14,000 shares of common stock, and its 10 percent bonds are convertibleinto 8,000 shares of common stock. Short reported net income of $53,800 for 20X4 and paid dividends of $30,700.Punch Manufacturing has 11 percent preferred stock and 12 percent bonds outstanding, neither of which is convertible. Punch reportedafter-tax income, excluding investment income from Short, of $115,000 in 20X4 and paid dividends of $64,000. The companies fileseparate tax returns and are subject to a 40 percent income tax.Required:Compute basic and diluted EPS for the consolidated entity. (Round your intermediate calculations and final answers to two decimalplaces.)

Basic EPS (Earnings Per Share) is the profit attributed to each outstanding share of common stock.…

Answered: Required: Compute basic and diluted EPS…

Required: Compute basic and diluted EPS for the consolidated entity. places.) Basic earnings per share Diluted earnings per share

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

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Punch Manufacturing Corporation owns 80 percent of the common shares of Short Retail Stores. The companies' balance sheets as of December 31, 20X4, were as follows: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Investment in Short Retail Stores Total Assets Liabilities and Equity Accounts Payable Bonds Payable Preferred Stock ($10 par value) Common Stock: $10 par value $5 par value Retained Earnings Total Liabilities and Equity Punch Manufacturing Corporation $ 55,000 105,000 270,000 95,000 500,000 (240,000) 140,000 $ 925,000 $ 75,000 290,000 200,000 150,000 210,000 $ 925,000 Short Retail Stores $ 35,000 85,000 130,000 65,000 320,000 (125,000) $ 510,000 $ 55,000 200,000 80,000 100,000 75,000 $510,000 Short Retail's 8 percent preferred stock is convertible into 13,000 shares of common stock, and its 10 percent bonds are convertible into 8,000 shares of common stock. Short reported net income of $54,000 for 20X4 and paid dividends…
Required: Compute basic and diluted EPS for the consolidated entity for 20X7. (Round your intermediate calculations and final answers to two decimal places.) Basic earnings per share Diluted earnings per share.
The balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows: Cash and receivables Inventory Plant assets (net) Intangible assets Current liabilities Long-term debt Common shares Retained earnings (deficit) Costs of arranging the acquisition Costs of issuing shares. On December 31, Year 6, E Ltd. issued 497 shares, with a fair value of $26 each, for 70% of the outstanding shares of J Ltd. Costs involved in the acquisition, paid in cash, were as follows: Plant assets Long-term debt The carrying amounts of J Ltd.'s net assets were equal to fair values on this date except for the following: Assets Liabilities and Equity J Ltd. $ 20,900 9,700 71,900 7,400 $ 109,900 $ 64,400 $ 30,100 98,900 45,200 155,800 46,600 91,500 (12,000) $ 410,600 $ 109,900 Fair value $ 65,700 42,800 E Ltd. was identified as the acquirer in the combination. Required: (a) Prepare the consolidated balance sheet of E Ltd. on December 31, Year 6, under the identifiable net assets method. Assets E Ltd.…
The December 31, 20X8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: PINT CORPORATION AND SALOON COMPANY Balance Sheets December 31, 20x8 Pint Corporation Saloon Company Assets Cash and Receivables Inventory Buildings and Equipment (net) Investment in Saloon Company Total Assets Liabilities and Equity Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity $ 118,000 162,000 315,000 224,900 $ 819,900 $ 115,900 185,000 $19,000 $ 819,900 $ 60,000 103,000 281,000 $ 444,000 $ 65,000 131,000 248,000 $ 444,003 Pint acquired the shares of Saloon Company on January 1, 20X8. On December 31, 20XB, assume Pint sold inventory to Saloon during 20X8 for $107,000 and Saloon sold inventory to Pint for $312,000. Pint's balance sheet contains inventory items purchased from Saloon for $97,000. The items cost Saloon $57,000 to produce. In addition, Saloon's inventory contains goods it purchased from…
The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Value Вook BIG COMPANY Market Market Value Value Value ASSE TS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 300,000 550,000 500,000 Accounts Receivable 600,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net 350,000 3,000,000 8,910,000 10,000,000 Share Premium 150,000 2,760,000 ? Goodwill 100,000 Retained Earnings 1,500,000 ? The companies combined their resources and formed BIGGEST Co. Research and development with a fair…
Poison Corporation holds 70 percent of Snake Company's voting common shares but none of its preferred shares. Summary balance sheets for the companies on December 31, 20X1, are as follows: Assets Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Snake Company Total Assets Liabilities and Owners' Equity Accounts Payable Wages Payable Preferred Stock Common Stock ($10 par value) Retained Earnings Total Liabilities and Owners' Equity Poison Corporation $ 19,000 38,000 120,000 280,000 (131,000) 124,600 $ 450,600 Consolidated earnings per share $ 83,600 42,000 100,000 120,000 105,000 $ 450,600 Required: Compute 20X1 consolidated EPS. Ignore any tax consequences. Note: Round your answer to 2 decimal places. Snake Company $ 27,000 48,000 72,000 210,000 (64,000) $ 293,000 $ 62,000 Neither of the preferred issues is convertible. Poison's preferred pays a 9 percent annual dividend and Snake's preferred pays a 10 percent dividend. Snake…
The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Book Value Вook BIG COMPANY Market Market Value Value Value ASSETS LIABILITY AND EQUITY Cash 105,000 105,000 Accounts Payable 300,000 330,000 Accounts Receivable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net Goodwill 220,000 2,000,000 4,790,000 4,500,000 Share Premium 775,000 100,000 100,000 Retained Earnings 1,390,000 Fair Вook Fair Market Book GIRL COMPANY Market Value Value Value Value Cash 300,000 300,000 Accounts Payable 550,000 500,000 Accounts Receivable 600,000 350,000 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 3,000,000 2,500,000 2,480,000 Inventory Property, Plant and Equipment, net Goodwill 8,910,000 10,000,000 Share Premium 100,000 Retained Earnings 2,760,000 ? 150,000 1,500,000 The companies combined their resources and formed BIGGEST Co. Research and development with a fair market…
Poppy Corporation owns 60 percent of Seed Company's common shares. Balance sheet data for the companies on December 31, 20X2, are as follows: Assets Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Seed Company Stock Total Assets Liabilities and Owners' Equity Accounts Payable Bonds Payable Common Stock ($10 par value) Retained Earnings Total Liabilities and Owners' Equity Poppy Corporation Basic earnings per share Diluted earnings per share $ 94,000 $ 35,000 83,000 57,000 117,000 100,000 92,000 (77,000) $ 487,000 690,000 (225,000) 135,000 $ 894,000 Seed Company $ 62,000 $ 119,000 250,000 200,000 300,000 100,000 225,000 125,000 $ 894,000 $ 487,000 The bonds of Poppy Corporation and Seed Company pay annual interest of 8 percent and 10 percent, respectively. Poppy's bonds are not convertible. Seed's bonds can be converted into 10,000 shares of its company stock any time after January 1, 20X1. An income tax rate of 40 percent is…
The following are the balances of BIG Company and GIRL Company as of January 1, 20x1. Fair Fair Вook Вook BIG COMPANY Market Market Value Value Value Value ASSE TS LIABILITY AND EQUITY 105,000 Accounts Payable 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 2,000,000 Cash 105,000 300,000 330,000 Accounts Receivable 550,000 1,300,000 1,320,000 Inventory Property, Plant and Equipment, net 220,000 4,790,000 4,500,000 Share Premium ? 775,000 ? Goodwill 100,000 100,000 Retained Earnings 1,390,000 ? Fair Вook Fair Market Вook GIRL COMPANY Market Value Value Value Value Cash 300,000 300,000 Accounts Payable 550,000 500,000 Accounts Receivable 600,000 470,000 Mortgage Payable 300,000 Ordinary Share, 20 par 2,500,000 2,480,000 350,000 8,910,000 10,000,000 Share Premium Inventory 3,000,000 ? Property, Plant and Equipment, net 2,760,000 ? Goodwill 150,000 100,000 Retained Earnings 1,500,000 The companies combined their resources and formed BIGGEST Co. Research and development with a fair…
On 31 December 20X2, the balances of Argon Enterprises Inc.’s shareholders’ equity accounts were as follows (all are credit balances): Capital stock $ 303,000 Contributed surplus 5,230 Retained earnings 105,400 Currency translation differences 1,400 Mark-to-market adjustments on available for sale investments 26,700 Cash flow hedges 2,000 Actuarial gains and losses 1,400 $ 445,130 Argon’s statement of comprehensive income for the year ending 31 December 20X3 showed the following amounts, from “net profit for the year” through “comprehensive income”: 31 December 20X3 31 December 20X2 Net profit for the year $ 44,900 $ 68,300 Other comprehensive income (loss) net of applicable income tax: Currency translation differences (4,200 ) 2,800 Mark-to-market adjustments on available for sale investments (34,300 ) 8,000 Actuarial gains (losses) 2,100 (6,500 ) Cash…
RRM, Inc. has the following balance sheet: RRM, Incorporated Balance Sheet as of 12/31/X0 Assets Liabilities and Equity Cash $ 2,700 Accruals $ 4,800 Marketable securities 2,500 Accounts payable 17,450 Accounts receivable 17,160 Notes payable 8,000 Inventory 19,820 Long-term debt 20,000 Common stock 22,000 Plant and equipment 43,000 Retained earnings 12,930 $ 85,180 $ 85,180 Sales are currently $100,000, but management expects sales to rise to $130,000. The net profit margin is expected to be 11 percent, and the firm distributes 60 percent of its earnings as dividends.Management is concerned about the firm's need for external funding to cover the expansion in assets required by the expansion in sales. To achieve sales of $130,000, management will have to expand plant by $10,000 and expects to increase its holdings of cash by $1,000. However, the holding of marketable securities may be reduced to…
The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value Inventory $ 439,750 $ 401,250 Land 776,250 1,019,250 Buildings 2,025,000 2,346,750 Customer relationships 0 873,750 Accounts payable (114,500 ) (114,500 ) Common stock (2,000,000 ) Additional paid-in capital (500,000 ) Retained earnings, 1/1 (445,000 ) Revenues (506,500 ) Expenses 325,000 Arturo pays cash of $4,403,500 to acquire Westmont. No stock is issued and Arturo pays $50,600 for legal fees to complete the transaction. Prepare Arturo’s journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record the acquisition of Westmont Company. Record the legal fees related to the combination.