Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $250,000 Preferred $1 stock, $10 par 250,000 Common stock, $25 par 250,000 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) $87,500, (b) $112,500, and (c) $137,500. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock $ c. Earnings per share on common stock $
Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $250,000 Preferred $1 stock, $10 par 250,000 Common stock, $25 par 250,000 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) $87,500, (b) $112,500, and (c) $137,500. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock $ c. Earnings per share on common stock $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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) | $250,000 |
| 250,000 | |
| Common stock, $25 par | 250,000 |
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) $87,500, (b) $112,500, and (c) $137,500.
Enter answers in dollars and cents, rounding to two decimal places.
a. Earnings per share on common stock $
b. Earnings per share on common stock $
c. Earnings per share on common stock $
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