Given the following convertible securities, determine theappropriate ranking to determine their impact on diluted earningsper share calculations:
1) 10% convertible preferred stock with dividends of $6,000declared during the year and shares convertible into 2,500 commonshares
2) 6% convertible bonds with interest expense (net of taxes) of$7,000 and convertible into 3,500 common shares
3) 8% convertible bonds with interest expense (net of taxes) of$4,000 and convertible into 1,600 common shares (Points : 2)
1, 2, 3
3, 1, 2
2, 1, 3
1, 3, 2
Which of the following items would not be included in a basicearnings per share calculation? (Points : 2)
undeclared dividends on noncumulative preferred stock
declared dividends on noncumulative preferred stock
undeclared dividends on cumulative preferred stock
declared dividends on cumulative preferred stock
When calculating earnings per share, dividends declared onnoncumulative preferred stock, but not paid, should be (Points :2)
added to net income in the earnings per share numerator
excluded from the earnings per share numerator
deducted from net income in the earnings per share numerator
deferred from the earnings per share numerator until paid
How will a company’s working capital and net income be affected bythe recording of a cash dividend on the declaration date? (Assumethe dividend is paid on a later date.)
Working Capital Net Income (Points : 2)
decrease decrease
decrease no effect
no effect no effect
no effect decrease
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