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chap16n - BRIEF EXERCISE 16-1 Cash 4,950,000 Discount on...

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BRIEF EXERCISE 16-1 Cash ............................................................................................ 4,950,000 Discount on Bonds Payable ....................................................................... 50,000 Bonds Payable ................................................................................... 5,000,000 BRIEF EXERCISE 16-2 Bonds Payable ............................................................................................. 1,000,000 Discount on Bonds Payable ............................................................. 30,000 Common Stock (1,000 X 50 X $10) .................................................. 500,000 Paid-in Capital in Excess of Par ...................................................... 470,000 BRIEF EXERCISE 16-3 Preferred Stock ............................................................................................ 50,000 Paid-in Capital in Excess of Par—Preferred Stock ($55 – $50) X 1,000 ........................................................................ 5,000 Common Stock .................................................................................. 20,000 Paid-in Capital in Excess of Par— Common Stock ($55 X 1,000) – (2,000 X $10) .................................................... 35,000 BRIEF EXERCISE 16-4 Cash ............................................................................................ 1,010,000 Discount on Bonds Payable ($1,000,000 – $970,392) ............................................................................ 29,608 Bonds Payable ................................................................................... 1,000,000 Paid-in Capital—Stock Warrants ..................................................... 39,608 FMV of bonds (1,000 X $1,000 X .98) $ 980,000 FMV of warrants (1,000 X $40) 40,000 Aggregate FMV $1,020,000 Allocated to bonds ($980/$1,020 X $1,010,000) $ 970,392 Allocated to warrants ($40/$1,020 X $1,010,000) 39,608 $1,010,000 BRIEF EXERCISE 16-5 Cash ............................................................................................ 1,010,000 Discount on Bonds Payable [$1,000,000 X (1 – .98)] ............................................................................. 20,000 Bonds Payable ................................................................................... 1,000,000 Paid-in Capital—Stock Warrants ..................................................... 30,000* *$1,000,000 X (1.01 – .98)
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BRIEF EXERCISE 16-6 1/1/08 No entry 12/31/08Compensation Expense ................................................................ 70,000 Paid-in Capital—Stock Options ................................................................ 70,000 12/31/09Compensation Expense ................................................................ 70,000 Paid-in Capital—Stock Options ................................................................ 70,000 BRIEF EXERCISE 16-7 $1,200,000 – (100,000 X $2) = $4.00 per share 250,000 shares BRIEF EXERCISE 16-8 Dates Outstanding Shares Outstanding Fraction of Year Weighted Shares 1/1–5/1 120,000 4/12 40,000 5/1–7/1 165,000 2/12 27,500 7/1–10/1 155,000 3/12 38,750 10/1–12/31 165,000 3/12 41,250 147,500 RIEF EXERCISE 16-9 (a) (200,000 X 4/12) + (230,000 X 8/12) = 220,000 (b) 230,000 BRIEF EXERCISE 16-10 Net income $300,000 Adjustment for interest, net of tax [$40,000 X (1 – .40)] 24,000 Adjusted net income $324,000 Weighted average number of shares adjusted for dilutive securities (100,000 + 16,000) ÷116,000 Diluted EPS $2.79 BRIEF EXERCISE 16-11 Net income $400,000 Weighted average number of shares adjusted for dilutive securities (50,000 + 10,000) ÷ 60,000 Diluted EPS $6.67
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BRIEF EXERCISE 16-12 Proceeds from assumed exercise of 30,000 options (30,000 X $10) $300,000 Shares issued upon exercise 30,000 Treasury shares purchasable ($300,000 ÷ $15) 20,000 Incremental shares 10,000 Diluted EPS = $300,000 = $1.43 200,000 + 10,000 BRIEF EXERCISE 16-13 Earnings per share Income before extraordinary loss ($600,000/50,000) $12.00 Extraordinary loss ($120,000/50,000) (2.40 ) Net income ($480,000/50,000) $ 9.60 *BRIEF EXERCISE 16-14 1/1/08 Unearned Compensation ............................................................ 90,000 Common Stock ......................................................................... 10,000 Paid-in Capital in Excess of Par .............................................. 80,000 12/31/08Compensation Expense ........................................................................... 30,000 Unearned Compensation ($90,000 ÷ 3) .................................. 30,000 *BRIEF EXERCISE 16-15 2007: (5,000 X $2) X 50% = $5,000 2008: (5,000 X $9) – $5,000 = $40,000 SOLUTIONS TO EXERCISES
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