Basic Earnings per share: The Basic Earnings per share is the amount of net income earned by each common share outstanding. The Earnings per share calculated by with help of following formula: Basic Earnings per share= Net Income - Preferred Dividend Weighted Average Common Shares Outstanding N e t I n c o m e a v a i l a b l e t o c o m m o n s t o c k h o l d e r = N e t i n c o m e – P r e f e r r e d D i v i d e n d Bonds: Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date. Bonds may be issued at a premium or discount. To Indicate: The effect of the bonds payable on net assets and EPS

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Chapter 8, Problem 8.3.1MBA

To determine

Concept Introduction:

Basic Earnings per share:

The Basic Earnings per share is the amount of net income earned by each common share outstanding. The Earnings per share calculated by with help of following formula:

Basic Earnings per share=Net Income - Preferred DividendWeighted Average Common Shares Outstanding

Net Income available to common stockholder = Net income – Preferred Dividend

Bonds:

Bonds are debt instruments issued by the borrower company to its lenders. Bonds are issued at a specified rate of interest and for a specified time period. The bondholders get a fixed rate of interest on the bonds and repayment of the bonds at the maturity date. Bonds may be issued at a premium or discount.

To Indicate:

The effect of the bonds payable on net assets and EPS

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