InClassExerciseCh.18 - In‐Class Exercises Chapter 18...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: In‐Class Exercises Chapter 18 Exercise #1 On January 1st, Ajax Inc. had 1,250,000 shares outstanding. During 2011 they have the following events: Date Economic Event February 1 Employees exercised stock options for 10,000 shares March 1 Issued stock dividend of 15% March 1 Issued cash dividend of $0.50 per share July 1 3 for 1 stock split November 1 Purchase 9,000 shares in the open market Ajax has net income of $10,300,000 and paid preferred dividends of $250,000. Required: Calculate basic EPS for Ajax in 2011. Exercise #2 Ajax Company reported net income of $235,200 and has had 100,000 outstanding common shares the entire year. As a result of a merger several years ago, there are options for 20,000 common shares and warrants for 5,000 common shares. The options can be exercised at a strike price of $7.40 and the warrants have a strike price of $7.00. The average stock price this year has been $8.25. Required: Calculate basic EPS Calculate diluted EPS Exercise #3 Ajax Corporation reported net income of $10,250,000 during 2011. During that year they had a weighted average number of shares equal to 4,500,000 shares. Ajax also has 1,250,000 outstanding shares of cumulative 6% preferred stock with $1.00 par value. The preferred shares are convertible to 80,000 shares of common stock. Ajax also has issued three sets of convertible securities as follows: Security Interest Cost (before No. of shares if deducting tax effect) converted A $250,000 125,000 B $1,125,000 425,000 C $750,000 600,000 Ajax has an effective tax rate of 20%. Required: Determine basic EPS Determine diluted EPS ACCT 4050 Page 1 of 3 Chapter 18 ‐ In‐Class Exercises ...
View Full Document

This note was uploaded on 04/06/2011 for the course ACCT 4050 taught by Professor Rodney during the Spring '11 term at University of Georgia Athens.

Ask a homework question - tutors are online