Two companies are financed as follows: X Co. Y Co. Bonds payable, 9% issued at face $5,000,000 $3,000,000 Common stock, $25 par 3,000,000 3,000,000 Income tax is estimated at 40% of income. Determine for each company the earnings per share of common stock, assuming that the income before bond interest and income taxes is $2,280,000 each.
Two companies are financed as follows: X Co. Y Co. Bonds payable, 9% issued at face $5,000,000 $3,000,000 Common stock, $25 par 3,000,000 3,000,000 Income tax is estimated at 40% of income. Determine for each company the earnings per share of common stock, assuming that the income before bond interest and income taxes is $2,280,000 each.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 1PEA
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- Two companies are financed as follows:
|
X Co. |
Y Co. |
Bonds payable, 9% issued at face |
$5,000,000 |
$3,000,000 |
Common stock, $25 par |
3,000,000 |
3,000,000 |
Income tax is estimated at 40% of income.
Determine for each company the earnings per share of common stock, assuming that the income before bond interest and income taxes is $2,280,000 each.
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