Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) Preferred $1 stock, $10 par Common stock, $25 par Income tax is estimated at 40% of income. $1,600,000 1,600,000 1,600,000 Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $672,000, (b) $832,000, and (c) $992,000. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock 4.8 X b. Earnings per share on common stock c. Earnings per share on common stock 7.8 X 9.3 X
Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) Preferred $1 stock, $10 par Common stock, $25 par Income tax is estimated at 40% of income. $1,600,000 1,600,000 1,600,000 Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $672,000, (b) $832,000, and (c) $992,000. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock 4.8 X b. Earnings per share on common stock c. Earnings per share on common stock 7.8 X 9.3 X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Effect of Financing on Earnings per Share
Henriksen Co., which produces and sells biking equipment, is financed as follows:
Bonds payable, 10 % (issued at face amount)
Preferred $1 stock, $10 par
$1,600,000
1,600,000
1,600,000
Common stock, $25 par
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $672,000, (b) $832,000, and (c) $992,000.
Enter answers in dollars and cents, rounding to two decimal places.
a. Earnings per share on common stock
4.8 X
b. Earnings per share on common stock
7.8 X
c. Earnings per share on common stock $
9.3 X
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