| Red Lake Corporation | |||||||||||
| EPS problem | |||||||||||
| Assuming a tax rate of 30%, calculate basic and diluted earnings per share for the fiscal year ended September 30, 2014. |
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| Net income is $540,000. | |||||||||||
| Common stock at October 1, 2013: | |||||||||||
| 10/1/2013 | |||||||||||
| Par $10 | |||||||||||
| Authorized shares | 300,000 | ||||||||||
| 12/1/2013 | |||||||||||
| Par $5 | |||||||||||
| Authorized shares | 600,000 | ||||||||||
| December 1, 2013, 60,000 shares issued in 2 for 1 stock split |
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| December 1, 2013, 280,000 shares ($5 par) issued at $39 |
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| Treasury stock | |||||||||||
| March 3, 2014, purchased 40,000 shares at $38 per share |
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| April 1, 2014, sold 40,000 shares at $40 per share |
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| Non-compensatory stock purchase warrants, Series A |
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| Originally, each warrant was exchangeable with $60 for 1 share common stock |
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| December 1, 2013, each warrant became exchangeable for 2 share common stock, at $30 per share |
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| October 1, 2013, 25,000 warrants issued at $6 each |
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| Non-compensatory stock purchase warrants, Series B |
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| Each warrant is exchangeable with $40 for 1 common share |
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| April 1, 2014, 20,000 warrants authorized and issued at $10 each |
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| First mortgage bonds | |||||||||||
| 5 1/2 % due 2023, nonconvertible, priced to yield 5% when issued. |
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| Balance October 1, 2013–authorized, issued, and outstanding, the face amount of $1,400,000 |
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| Convertible debentures | |||||||||||
| 7% due 2030. Originally, each $1,000 bond convertible any time before maturity into 20 shares common stock |
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| December 1, 2013, conversion rate changed to 40 sahres for each bond |
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| October 1, 2013, authorized and issued at par of $2,400,000 |
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| Other information | Average price for year ended 9-30-2014 | ||||||||||
| Common stock | 37.50 | ||||||||||
| First mortgage bonds | 87.00 | ||||||||||
| Convertible debentures | 115.00 | ||||||||||
| Series A warrants | 15.00 | ||||||||||
| Series B warrants | 9.50 | ||||||||||
| Where applicable, prices are adjusted for the stock split. |
