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Business Accounting Financial Accounting (12th Edition) (What's New in Accounting)

Common stock : These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend. Following is the calculation to identify the plan that will result in higher earnings per share Particulars Plan A Plan B Issue $2,000,000 of 6% bonds payable Issue $2,000,000of common stock Net income before expansion $500,000 $500,000 Project income before interest and income tax $400,000 $400,000 Less : Interest expense $120,000 $0 Project income before income tax $280,000 $400,000 less : Income tax expense ($84,000) ($120,000) Project net income $196,000 $280,000 Total net income of company $696,000 $780,000 Earnings per share including new project Plan A (1) $6.96 Plan B (2) $3.90 Table (1) Note: Interest tax expense ( $ 120 , 000 ) is 6% of bonds payable ( $ 2 , 000 , 000 × 6 % )

Common stock : These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend. Following is the calculation to identify the plan that will result in higher earnings per share Particulars Plan A Plan B Issue $2,000,000 of 6% bonds payable Issue $2,000,000of common stock Net income before expansion $500,000 $500,000 Project income before interest and income tax $400,000 $400,000 Less : Interest expense $120,000 $0 Project income before income tax $280,000 $400,000 less : Income tax expense ($84,000) ($120,000) Project net income $196,000 $280,000 Total net income of company $696,000 $780,000 Earnings per share including new project Plan A (1) $6.96 Plan B (2) $3.90 Table (1) Note: Interest tax expense ( $ 120 , 000 ) is 6% of bonds payable ( $ 2 , 000 , 000 × 6 % )

Solution Summary: The author explains that common stock is the ordinary shares that a corporation issues to the investors in order to raise funds.

Financial Accounting (12th Edition) (What's New in Accounting)

Financial Accounting (12th Edition) (What's New in Accounting)

9th Edition

ISBN: 9780134726656

Author: Harrison

Publisher: PEARSON

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Chapter 10 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 10 - The two main categories of stockholders equity are...Ch. 10 - Prob. 2QC Ch. 10 - Stockholders of a corporation directly elect the...Ch. 10 - The par value of a share of common stock a. is...Ch. 10 - Prob. 5QC Ch. 10 - If a corporation issues 1,000 shares of 1 par...Ch. 10 - Prob. 7QC Ch. 10 - Sandusky Corporation purchased 3,000 shares of its...Ch. 10 - Graves Corporation issued 50,000 shares of 1 par...Ch. 10 - Prob. 10QC

Ch. 10 - For cash dividends, the journal entry on the date...Ch. 10 - Prob. 12QC Ch. 10 - Prob. 13QC Ch. 10 - Prob. 14QC Ch. 10 - Prob. 15QC Ch. 10 - Prob. 16QC Ch. 10 - Prob. 10.1EC Ch. 10 - Prob. 10.1S Ch. 10 - (Learning Objective 1: Describe characteristics of...Ch. 10 - Prob. 10.3S Ch. 10 - Prob. 10.4S Ch. 10 - (Learning Objective 2: Record issuance of stock...Ch. 10 - Prob. 10.6S Ch. 10 - Prob. 10.7S Ch. 10 - Prob. 10.8S Ch. 10 - Prob. 10.9S Ch. 10 - Prob. 10.10S Ch. 10 - (Learning Objective 4: Divide cash dividends...Ch. 10 - Prob. 10.12S Ch. 10 - (Learning Objective 6: Prepare the stockholders...Ch. 10 - (Learning Objective 5: Use stockholders equity...Ch. 10 - (Learning Objective 5: Calculate book value per...Ch. 10 - (Learning Objective 5: Calculate and explain...Ch. 10 - (Learning Objective 5: Calculate return on assets...Ch. 10 - Prob. 10.18S Ch. 10 - (Learning Objective 2. 5: Define and use various...Ch. 10 - Prob. 10.20S Ch. 10 - Prob. 10.21S Ch. 10 - Prob. 10.22S Ch. 10 - (Learning Objective 1: Identify key terms...Ch. 10 - (Learning Objectives 2, 6: Account for issuance of...Ch. 10 - Prob. 10.25AE Ch. 10 - Prob. 10.26AE Ch. 10 - Prob. 10.27AE Ch. 10 - (Learning Objective 3: Account for the purchase...Ch. 10 - (Learning Objectives 2, 3, 4: Account for issuance...Ch. 10 - (Learning Objective 6: Report stockholders equity...Ch. 10 - Prob. 10.31AE Ch. 10 - LO 4 (Learning Objective 4: Calculate dividends on...Ch. 10 - Prob. 10.33AE Ch. 10 - Prob. 10.34AE Ch. 10 - LO 5 (Learning Objective 5: Calculate and...Ch. 10 - LO 4,6 (Learning Objective 4, 6: Analyze...Ch. 10 - (Learning Objective 5: Evaluate profitability)...Ch. 10 - Prob. 10.38AE Ch. 10 - LO 6 (Learning Objective 6: Use a companys...Ch. 10 - (Learning Objective 1: Identify key terms...Ch. 10 - (Learning Objectives 2, 6: Account for issuance of...Ch. 10 - Prob. 10.42BE Ch. 10 - Prob. 10.43BE Ch. 10 - (Learning Objectives 3, 6: Show how treasury stock...Ch. 10 - (Learning Objective 3: Account for the purchase...Ch. 10 - (Learning Objectives 2, 3, 4: Account for issuance...Ch. 10 - Prob. 10.47BE Ch. 10 - Prob. 10.48BE Ch. 10 - Prob. 10.49BE Ch. 10 - Prob. 10.50BE Ch. 10 - (Learning Objectives 2, 3, 4: Measure the effect s...Ch. 10 - Prob. 10.52BE Ch. 10 - (Learning Objective 5: Analyze alternative plans...Ch. 10 - (Learning Objective 5: Evaluate profitability)...Ch. 10 - Prob. 10.55BE Ch. 10 - Prob. 10.56BE Ch. 10 - Prob. 10.57Q Ch. 10 - Prob. 10.58Q Ch. 10 - Prob. 10.59Q Ch. 10 - Prob. 10.60Q Ch. 10 - Prob. 10.61Q Ch. 10 - Prob. 10.62Q Ch. 10 - Prob. 10.63Q Ch. 10 - Prob. 10.64Q Ch. 10 - Quill Corporation paid 28 per share to purchase...Ch. 10 - Prob. 10.66Q Ch. 10 - Prob. 10.67Q Ch. 10 - Prob. 10.68Q Ch. 10 - Prob. 10.69Q Ch. 10 - Prob. 10.70Q Ch. 10 - Prob. 10.71Q Ch. 10 - Prob. 10.72Q Ch. 10 - Prob. 10.73Q Ch. 10 - Prob. 10.74Q Ch. 10 - Prob. 10.75Q Ch. 10 - Prob. 10.76AP Ch. 10 - (Learning Objective 6: Report stockholders equity)...Ch. 10 - (Learning Objectives 2, 4: Analyze stockholders...Ch. 10 - (Learning Objectives 2, 3, 4: Account for stock...Ch. 10 - Prob. 10.80AP Ch. 10 - Prob. 10.81AP Ch. 10 - Prob. 10.82AP Ch. 10 - Prob. 10.83AP Ch. 10 - Prob. 10.84BP Ch. 10 - Prob. 10.85BP Ch. 10 - (Learning Objectives 2, 4: Analyze stockholders...Ch. 10 - (Learning Objectives 2, 3, 4: Account for stock...Ch. 10 - Prob. 10.88BP Ch. 10 - Prob. 10.89BP Ch. 10 - (Learning Objective 5: Differentiate financing...Ch. 10 - Prob. 10.91BP Ch. 10 - Prob. 10.92CEP Ch. 10 - Prob. 10.93CEP Ch. 10 - Prob. 10.94CEP Ch. 10 - Prob. 10.95CEP Ch. 10 - (Learning Objectives 2, 3, 4, 6: Analyze...Ch. 10 - (Learning Objectives 2, 3, 4: Calculate impact of...Ch. 10 - Prob. 10.98DC Ch. 10 - Prob. 10.99DC Ch. 10 - Prob. 10.100EIC Ch. 10 - Prob. 10.101EIC Ch. 10 - (Learning Objectives 2, 3, 4, 5: Analyze common...Ch. 10 - (Learning Objectives 2, 3, 4: Analyze treasury...

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