A) Determine the Weighted Average number of Common Shares

Period Covered Number of Shares Months Stock Split Weight

Jan. 1, 20 - Jul. 31, 20 450,000 7/12 - 262,500
Aug. 1, 20 - Dec. 31, 20 600,000 5/12 - 250,000
Weighted Average no. of Common Shares 12 512,500

B) Earnings Per Share

Net Income # of Shares EPS
Income before Discontinued
Operations 1,300,000
Loss from Discontinued Operations (200,000)
Net Income 1,100,000
Preferred Dividends 60,000
BASIC EPS 1,040,000 512,500 $ 2.03

Dilution:
Convertible Bonds
$1,000,000 * 4% * 80% 32,000
$1,000,000 / $1,000 * 25 25,000 $ 1.28 Dilutive
Options Exercised
Proceeds: 20,000 * 3 = 60,000
Buyback: $60,000 / $5 = 12,000
Shares remaining: 20,000 - 12,000 - 8,000 $ - Dilutive
FULLY DILUTED EPS 1,072,000 545,500 1.97

INCOME STATEMENT
Basic Earnings per Share
Before Discontinued Operations $ 2.42
Net Income (after discontinued) $ 2.03

Fully Diluted Earnings per Share

Before Discontinued Operations $ 2.33
Net Income (after discontinued) $ 1.97
Weighted Average

Just a test
 Net Income # of Shares EPS
Net Income 1,500,000
Preferred Dividends 106,250
BASIC EPS 1,393,750 1,000,000 $ 1.39

Dilution
Convertible Bonds
$5,000,000 * 7% * 70% 245,000
$5,000,000 / 1,000 * 50 250,000 $ 0.98 Dilutive
Options Exercised
Proceeds: 100,000 * 15 = $1,500,000
Buyback: $1,500,000 / 20 = 75,000
Shares Remaining: 100,000 - 75,000 - 25,000 $ -
FULLY DILUTED EPS 1,638,750 1,275,000 $ 1.29
A) Retirement of Bonds
Bonds Payable, June 30, 2013 784,000
Discount 16,000
Amortized 5,600
Unamortized 10,400

Date Transaction Debit Credit

30-Jun-20 Bonds Payable 789,600
Loss on Redemption 42,400 Premium on Call Price
Cash 832,000 Unamortized Discount
Loss on Redemption
Cash 1,020,000
Bonds Payable 1,020,000
Bonds Pauable
 Assume bonds were issued at 102 on June 30, 2013
816000
16000
5600
10400

Bonds Payable 810400

32,000 Loss on Redemption 21,600
10,400 Cash 832,000
42,400