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Problem #1 10 points

Indicate the effect of each of the following transactions on total stockholders' equity by placing an "X" in the appropriate column.
		Increase	Decrease	No effect
#1	Treasury stock is resold at more than cost.	X			use the dropdowns to choose "X" but only choose one X for each row
#2	Operating loss for the period.		X		use the dropdowns to choose "X" but only choose one X for each row
#3	Retirement of bonds payable at more than book value		X		use the dropdowns to choose "X" but only choose one X for each row
#4	Declaration of a stock dividend.			X	use the dropdowns to choose "X" but only choose one X for each row
#5	Acquisition of machinery for common stock.	X			use the dropdowns to choose "X" but only choose one X for each row
#6	Conversion of bonds payable into common stock	X			use the dropdowns to choose "X" but only choose one X for each row
#7	Not declaring a dividend on cumulative preferred stock.			X	use the dropdowns to choose "X" but only choose one X for each row
#8	Declaration of cash dividend.		X		use the dropdowns to choose "X" but only choose one X for each row
#9	Payment of cash dividend.			X	use the dropdowns to choose "X" but only choose one X for each row
#10	Stock split				use the dropdowns to choose "X" but only choose one X for each row

Problem #2 15 points

The following information relates to Southern Corporation:
During 2021 Southern Corp. had net income of:	$800,000
On January 1, 2021 shares of common stock outstanding were:	200,000
On April 1, the number of additional shares that the company issued were:	20,000
On September 1, the number of shares that the company repurchased were:	30,000
The number of options to buy common stock that are outstanding are:	30,000
The strike price of the options outstanding is:	$40
The average market price of the common stock during 2021 is:	$50
The tax rate is:	40%
During 2021 the number of shares of convertible preferred stock outstanding was:	40,000
The preferred stock has a par value per share of:	$100
The company's policy is to pay a dividend on the preferred stock per share of	$3.50
Each share of preferred stock is convertible into common stock for this many shares:	3
During 2020, the company issued this many convertible bonds:	2,000
The rate on the convertible bonds is:	8%
Each bond has a par value of:	$1,000
Each bond is convertible into this many shares of common stock:	30
Use the information above to either compute a calculation or answer the questions:
IMPORTANT - Enter your amounts in the blue boxes in column B to receive full credit for each item
Preferred dividends for 2021		you are not correct
Weighted average shares of common stock outstanding		you are not correct
Basic Earnings per share (do not round if you are using a formula the next cell is rounding automatically for you)		- 0
Use the drop down boxes to determine if the item is dilutive or antidilutive
Convertible preferred stock		use the drop down boxes to enter your response
Convertible bonds		use the drop down boxes to enter your response
Options		use the drop down boxes to enter your response
Numerator impact on convertible preferred stock, when computing diluted eps, if applicable. Enter 0 if not applicable		enter as a positive amount if it increases and a negative amount if it is a decrease
Denominator impact on convertible preferred stock, when computing diluted eps, if applicable. Enter 0 if not applicable		enter as a positive amount if it increases and a negative amount if it is a decrease
Numerator impact on convertible bonds, when computing diluted eps, if applicable. Enter 0 if not applicable		enter as a positive amount if it increases and a negative amount if it is a decrease
Denominator impact on convertible bonds, when computing diluted eps, if applicable. Enter 0 if not applicable		enter as a positive amount if it increases and a negative amount if it is a decrease
Numerator impact on options, when computing diluted eps, if applicable. Enter 0 if not applicable		enter as a positive amount if it increases and a negative amount if it is a decrease
Denominator impact on options, when computing diluted eps, if applicable. Enter 0 if not applicable		enter as a positive amount if it increases and a negative amount if it is a decrease
Numerator used to calculate Diluted Earnings per share
Denominator used to calculate Diluted Earnings per share
Diluted earnings per share (do not round if you are using a formula the next cell is rounding automatically for you)		- 0
(SHOW YOUR WORK BELOW)
Weighted average shares of common stock outstanding
Convertible preferred stock
Convertible bonds
Options

Sheet3

The following information relates to Southern Corporation:
During 2021 Southern Corp. had net income of:	$800,000
On January 1, 2021 shares of common stock outstanding were:	200,000
On April 1, the number of additional shares that the company issued were:	20,000
On September 1, the number of shares that the company repurchased were:	30,000
The number of options to buy common stock that are outstanding are:	30,000
The strike price of the options outstanding is:	$40
The average market price of the common stock during 2021 is:	$50
The tax rate is:	40%
During 2021 the number of shares of convertible preferred stock outstanding was:	40,000
The preferred stock has a par value per share of:	$100
The company's policy is to pay a dividend on the preferred stock per share of	$3.50
Each share of preferred stock is convertible into common stock for this many shares:	3
During 2020, the company issued this many convertible bonds:	2,000
The rate on the convertible bonds is:	8%
Each bond has a par value of:	$1,000
Each bond is convertible into this many shares of common stock:	30
Use the information above to either compute a calculation or answer the questions:
IMPORTANT - Enter your amounts in the blue boxes in column B to receive full credit for each item
Preferred dividends for 2021	$140,000		FALSE
Weighted average shares of common stock outstanding	205,000		FALSE
Basic Earnings per share (do not round if you are using a formula the next cell is rounding automatically for you)	3.22	3.22		FALSE
Use the drop down boxes to determine if the item is dilutive or antidilutive
Convertible preferred stock	dilutive		FALSE
Convertible bonds	dilutive		FALSE
Options	dilutive		FALSE
Numerator impact on convertible preferred stock, when computing diluted eps, if applicable. Enter 0 if not applicable	$140,000	enter as a positive amut if it increases and a negative amount if it is a decrease	FALSE
Denominator impact on convertible preferred stock, when computing diluted eps, if applicable. Enter 0 if not applicable	$120,000	enter as a positive amut if it increases and a negative amount if it is a decrease	FALSE
Numerator impact on convertible bonds, when computing diluted eps, if applicable. Enter 0 if not applicable	96,000	enter as a positive amut if it increases and a negative amount if it is a decrease	FALSE
Denominator impact on convertible bonds, when computing diluted eps, if applicable. Enter 0 if not applicable	60,000	enter as a positive amut if it increases and a negative amount if it is a decrease	FALSE
Numerator impact on options, when computing diluted eps, if applicable. Enter 0 if not applicable	$0	enter as a positive amut if it increases and a negative amount if it is a decrease	1
Denominator impact on options, when computing diluted eps, if applicable. Enter 0 if not applicable	$6,000	enter as a positive amut if it increases and a negative amount if it is a decrease	FALSE
Numerator used to calculate Diluted Earnings per share	$896,000		FALSE
Denominator used to calculate Diluted Earnings per share	391,000		FALSE
Diluted earnings per share (do not round if you are using a formula the next cell is rounding automatically for you)	2.29	2.29		FALSE	1
(Show you work below)
Common stock at beginning of year	200,000	1	200,000
Shares issued on April 1	20,000	0.75	15,000
Treasury stock repurchased on September 1	30,000	0.3333333333	(10,000)
Weighted average shares of common stock outstanding			205,000
Convertible preferred stock
numerator impact	$140,000
denominator impact	120,000
numerator/denominator	$1.17
Basic earnings per share	3.22
securities are dilutive the impact of the numerator / denominator is less than beps
Convertible bonds
numerator impact	96,000
denominator impact	60,000
numerator/denominator	1.600
Basic earnings per share	3.22
securities are dilutive the impact of the numerator / denominator is less than beps
Options use Treasury Stock method
# of options purchased	30,000
Price paid	$1,200,000
# of shares repurchased with proceeds of options exercised	24000
numerator impact	0
denominator impact	6,000

Dropdowns

dilutive	X	10
antidilutive
10

Sheet5

Indicate the effect of each of the following transactions on total stockholders' equity by placing an "X" in the appropriate column.

Increase

Decrease

No effect

Treasury stock is resold at more than cost.

Operating loss for the period.

Retirement of bonds payable at more than book value

Declaration of a stock dividend.

Acquisition of machinery for common stock.

Conversion of bonds payable into common stock

Not declaring a dividend on cumulative preferred stock.

Declaration of cash dividend.

Payment of cash dividend.

#10

Stock split