Q1. Eisler Corporation issued 2,370 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 97, and the warrants had a market price of $42.
Use the proportional method to record the issuance of the bonds and warrants.
Q2. On January 1, 2014, Lennon Industries had stock outstanding as follows.
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6% Cumulative preferred stock, $116 par value, issued and outstanding 11,800 shares
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$1,368,800
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Common stock, $11 par value, issued and outstanding 285,600 shares
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3,141,600
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To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 253,200 common shares. The acquisitions took place as shown below.
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Date of Acquisition
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Shares Issued
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Company A April 1, 2014
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104,400
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Company B July 1, 2014
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123,600
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Company C October 1, 2014
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25,200
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On May 14, 2014, Lennon realized a $148,800 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.
On December 31, 2014, Lennon recorded net income of $379,200 before tax and exclusive of the gain.
Assuming a 47% tax rate, compute the earnings per share data that should appear on the financial statements of Lennon Industries as of December 31, 2014. Assume that the expropriation is extraordinary.