- •99. What is the entry to record the expiration of 10% of the options on December 31, 20010?
- •118. Gear Corporation had the following common stock record during the current calendar year:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •137. On January 1, 2006, Shamu Corporation had 100,000 shares of common stock outstanding. The following transactions occurred during 2006:
- •Required:
- •Required:
- •Required:
- •Required:
- •In its 2004 Annual Report to shareholders, Comfort Stores disclosed the following footnote about its eps:
- •163. What is restricted stock? Describe how compensation expense is determined and recorded for a restricted stock plan.
Required:
-
Determine the total compensation cost pertaining to the options, assuming Burford chooses to follow the FASB's accounting approach for fixed compensation plans. Show calculations.
-
Prepare the appropriate journal entry (if any) to record the award of options on January 1, 2006.
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Prepare the appropriate journal entry (if any) to record compensation expense on December 31, 2006.
Answer:
Requirement 1
-
12 million
number of options
x $3
fair value
$ 36 million
total compensation
Requirement 2
no entry
Requirement 3
-
($ in millions)
Compensation expense ($36 million ÷ 4 years)
9
Paid-in capital - stock options
9
Learning Objective: 2 Level of Learning: 3
129. Burns Company reported $752.4 million in net income in 2006. On January 1, 2006, the company had 400 million shares of common stock outstanding. On March 1, 2006, 24 million new shares of common stock were sold for cash. On June 1, 2006, the company's common stock split 2 for 1. On July 1, 2006, 8 million shares were reacquired as treasury stock.
Required:
Compute Burns' basic earnings per share for the year ended December 31, 2006.
Answer:
(400M x 2)+ (24M x 10/12 x 2)) - (8M x 6/12) = 836,000,000 weighted-average shares
$752.4 million/836 million = $.90 EPS
Learning Objective: 7 Level of Learning: 3
130. Sugarland Industries reported a net income of $750,750 on December 31, 2006. At the beginning of the year, the company had 500,000 common shares outstanding. On April 1, the company sold 27,000 shares for cash. On August 31, the company issued 48,000 additional shares as part of a merger.
Required:
Compute Sugarland's net income that would produce a basic EPS of $2.00 per share for 2006.
Answer:
500,000 + (27,000 x 9/12) + (48,000 x 4/12) = 536,250 weighted-average shares
X/536,250 = $2.00 EPS
X = $1,072,500
Learning Objective: 6 Level of Learning: 3
131. Nagy Industries reported a net income of $619,369 on December 31, 2006. At the beginning of the year, the company had 500,000 common shares outstanding. On April 1, the company sold 27,000 shares for cash. On August 31, the company issued 48,000 additional shares as part of a merger. On December 1, 2006, the company declared and issued a 10% stock dividend.
Required:
Compute Nagy's net income that would produce a basic EPS of $2.00 per share for 2006.
Answer:
(500,000 x 1.10) + (27,000 x 9/12 x 1.10) + (48,000 x 4/12 x 1.10) = 589,875 weighted-average shares
X/589,875 = $2.00 EPS
X = $1,179,750
Learning Objective: 6 Level of Learning: 3
132. Rice Inc. had 420 million shares of common stock and 1 million shares of 6%, $200 par, cumulative preferred stock outstanding at the end of 2005 and 2006. No dividends were declared or paid on either class of stock in either year. Net income for 2006 was $398.4 million. The company's tax rate is 30%.