EX 14-1 Effect of financing on earnings per shareHenriksen Co., which produces and sells biking equipment, is financed as follows:Bonds payable, 5% (issued at face amount)oliqmsPreferred $2.00 stock, $100 parCommon stock, $25 par$6,000,0003,000,0005,000,000OBJ. 1Income tax is estimated at 40% of income.Determine the earnings per share of common stock, assuming that the income beforebond interest and income tax is (a) $900,000, (b) $1,100,000, and (c) $1,500,000.

the formula for earnings per share of common stock = net income available to common stock…

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) $900,000, (b) $1,100,000, and (c) $1,500,000.

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) $900,000, (b) $1,100,000, and (c) $1,500,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

Question

EX 14-1 Effect of financing on earnings per share
Henriksen Co., which produces and sells biking equipment, is financed as follows:
Bonds payable, 5% (issued at face amount)
oliqms
Preferred $2.00 stock, $100 par
Common stock, $25 par
$6,000,000
3,000,000
5,000,000
OBJ. 1
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) $900,000, (b) $1,100,000, and (c) $1,500,000.

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