Business: On June 1, 2018, Cheyenne Company and Ayayai Company merged to form Pina Inc. A total of 808,000 shares were issued to complete the merger. The new corporation reports on a calendar-year basis. On April 1, 2020, the company issued an additional 568,000 shares of stock for cash. All 1,376,000 shares were outstanding on December 31, 2020. Pina Inc. also issued $600,000 of 20-year, 7% convertible bonds at par on July 1, 2020. Each $1,000 bond converts to 44 shares of common at any interest date. None

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On June 1, 2018, Cheyenne Company and Ayayai Company

Ответ:

westlakebuddy7884

07.04.2021

Business

Follows are the solution to the given points:

Explanation:

In point a:

part 1)

Calculating the Basic Earning Per Share:

$Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Shares \ \ \ \ \ \ \ \ \ \ \ \ \ Weight \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Shares\ Weight\\\\$

$from\ Jan \ 1\ to \ April \ 1,\ 2020 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 800000 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \frac{3}{12} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 200000\\\\from \ Apr \ 1 \ to \ Dec \ 31, 2020 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 1200000 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \frac{9}{12} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \900000 \\\\$

$\ \ \ \ \ \ \ \ \ \ \ \ 1100000$

Part 2)

Calculating Diluted Earning Per Share:

$Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Shares \ \ \ \ \ \ \ \ \ \ \ \ \ Weight \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Shares\ Weight\\\\$

$from\ Jan \ 1\ to \ April \ 1,\ 2020 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 800000 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \frac{3}{12} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 200000\\\\from \ Apr \ 1 \ to \ Jul \ 31, 2020 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 1200000 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \frac{3}{12} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 300000\\\\$

$from \ Jul\ 1 \ to \ Dec\ 31, 2020 \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 1224000\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \frac{6}{12} \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 612000\\\\$

$\ \ \ \ \ \ \ \ \ \ \ \ 1112000$

Cabling bond in shares $= \frac{\$600000}{\$1000} \times 40\ shares = 24000\\\\$

In point b:

In part 1:

Basic Share Earning = Net Income = $\$1540000.$

In part 2:

$\text{Earning by Share Diluted}\\\\\text{Revenue Net + Saving interest - More Tax}\\\\\text{Interest Save} = \$600,000 \times 8\% \times \frac{1}{2}\ years = \$24,000 \\\\\text{Additional Tax} = \$24000 \times 20\% = \$4800\\\\\text{Adjusted Net Income} = \$1540000 + \$24000 - \$4800 = \$1559200$

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