What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?

HW assignment 4

Please show calculations for each question to get credit; failure to do so will result in receiving a grade of 0 for the assignment.

 

1. In 2014, Eklund, Inc., issued for $103 per share, 70,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Eklund’s $26 par value common stock at the option of the preferred stockholder. In August 2015, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
2. $1,190,000.
3. $ 910,000.
4. $1,750,000.
5. $1,960,000.

 

Use the following information for questions 2 and 3.

 

On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne’s common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne’s common stock was $35 per share and of the warrants was $2.

 

2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for
3. $36,560.
4. $36,720.
5. $37,080.
6. $65,000.

 

3. On May 1, 2014, Payne should record the bonds with a
4. discount of $36,000.
5. premium of $10,080.
6. discount of $18,720.
7. premium of $27,000.

Use the following information for questions 4 and 5.

 

Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 6% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 40 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%.

Basic earnings per share for 2015 is (rounded to the nearest penny)

4. $1.57.
5. $1.71.
6. $1.80.
7. $1.85.

 

5. Diluted earnings per share for 2015 is (rounded to the nearest penny)
6. $1.41.
7. $1.49.
8. $1.53.
9. $1.58.

 

HW assignment 4

Please show calculations for each question to get credit; failure to do so will result in receiving a grade of 0 for the assignment.

 

1. In 2014, Eklund, Inc., issued for $103 per share, 70,000 shares of $100 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Eklund’s $26 par value common stock at the option of the preferred stockholder. In August 2015, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
2. $1,190,000.
3. $ 910,000.
4. $1,750,000.
5. $1,960,000.

 

Use the following information for questions 2 and 3.

 

On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne’s common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne’s common stock was $35 per share and of the warrants was $2.

 

2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for
3. $36,560.
4. $36,720.
5. $37,080.
6. $65,000.

 

3. On May 1, 2014, Payne should record the bonds with a
4. discount of $36,000.
5. premium of $10,080.
6. discount of $18,720.
7. premium of $27,000.

Use the following information for questions 4 and 5.

 

Hanson Co. had 200,000 shares of common stock, 20,000 shares of convertible preferred stock, and $1,000,000 of 6% convertible bonds outstanding during 2015. The preferred stock is convertible into 40,000 shares of common stock. During 2015, Hanson paid dividends of $.60 per share on the common stock and $1.50 per share on the preferred stock. Each $1,000 bond is convertible into 40 shares of common stock. The net income for 2015 was $400,000 and the income tax rate was 30%.

Basic earnings per share for 2015 is (rounded to the nearest penny)

4. $1.57.
5. $1.71.
6. $1.80.
7. $1.85.

 

5. Diluted earnings per share for 2015 is (rounded to the nearest penny)
6. $1.41.
7. $1.49.
8. $1.53.
9. $1.58.