1. Kurochka, Inc. has net income (30% tax rate) of $1,200,000 for 2013, and an average number of shares outstanding during the year of 500,000 shares. The corporation issued $2,000,000 par value of 10-year, 9% convertible bonds on January 1, 2011 at a $180,000 discount. The convertible bonds are convertible into 70,000 shares of common stock. Assume the company uses the straight-line method for amortizing bond discount.

Compute the earnings per share data (basic and diluted), excluding any notes if required.

2. Assume that the following data relate to Russen, Inc. for the year 2013:

Net income (30% tax rate) $3,000,000
Average common shares outstanding 2013 1,000,000 shares
10% cumulative convertible preferred stock:
Convertible into 80,000 shares of common $1,600,000
8% convertible bonds; convertible into 75,000
shares of common $2,500,000
Stock options:
Exercisable at the option price of $25 per share;
average market price in 2013, $30 84,000 options

Compute (a) basic earnings per share, and (b) diluted earnings per share.
3. On July 4, 2012, Plen Company issued for $6,300,000 a total of 60,000 shares of $100 par value, 7%
noncumulative preferred stock along with one detachable warrant for each share issued. Each warrant contains a
right to purchase one share of Plen $10 par value common stock for $15 per share. The stock without the
warrants would normally sell for $6,150,000. The market price of the rights on July 1, 2012, was $2.50 per right.
On October 31, 2012, when the market price of the common stock was $19 per share and the market value of the
rights was $3.00 per right, 24,000 rights were exercised. As a result of the exercise of the 24,000 rights and the
issuance of the related common stock, what journal entry would Plen make?

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