Bundle: Financial & Managerial Accounting, Loose-leaf Version, 13th + CengageNOWv2, 1 term (6 months) Printed Access Card Corporate Financial ... Access Card for Managerial Accounting, 13th
13th Edition
ISBN: 9781305781429
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 12, Problem 12.1EX
a)
To determine
Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.
Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.
Earnings per Share: It is a portion of profit that is earned by each common stock.
Formula:
To Determine: Earnings per share of common stock.
b)
To determine
Earnings per share of common stock.
c)
To determine
Earnings per share of common stock.
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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)
$1,900,000
Preferred $2 stock, $20 par
1,900,000
Common stock, $25 par
1,900,000
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) $684,000, (b) $874,000, and (c) $1,064,000.
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 $
Effect of Financing on Earnings per Share
Domanico Co., which produces and sells biking equipment, is financed as follows:
Bonds payable, 10% (issued at face amount)
$1,200,000
Preferred $1 stock, $10 par
1,200,000
Common stock, $25 par
1,200,000
Income tax is estimated at 40% of income.
Determine the earnings per share on common stock, assuming that the income before
bond interest and income tax is (a) $432,000, (b) $552,000, and (c) $672,000.
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
Effect of Financing on Earnings Per Share
BSF Co., which produces and sells skiing equipment, is financed as follows:
Bonds payable, 10% (issued at face amount)
$850,000
Preferred 2% stock, $20 par
850,000
Common stock, $25 par
850,000
Income tax is estimated at 60% of income.
Round your answers to the nearest cent.
a. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $331,500.
per share
b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $416,500.
per share
c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $501,500.
per share
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Recall that earnings per share is calculated by dividing Net Income minus Preferred Dividends by Number of Common Shares Outstanding.
Chapter 12 Solutions
Bundle: Financial & Managerial Accounting, Loose-leaf Version, 13th + CengageNOWv2, 1 term (6 months) Printed Access Card Corporate Financial ... Access Card for Managerial Accounting, 13th
Ch. 12 - Describe the two distinct obligations incurred by...Ch. 12 - Explain the meaning of each of the following terms...Ch. 12 - Prob. 3DQCh. 12 - A corporation issues 26,000,000 of 9% bonds to...Ch. 12 - Prob. 5DQCh. 12 - The following data relate to a 2,000,000, 8% bond...Ch. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Fleeson Company needs additional funds to purchase...Ch. 12 - Prob. 10DQ
Ch. 12 - Prob. 12.1APECh. 12 - Prob. 12.1BPECh. 12 - Issuing bonds at face amount On January 1, the...Ch. 12 - Prob. 12.2BPECh. 12 - Issuing bonds at a discount On the first day of...Ch. 12 - Prob. 12.3BPECh. 12 - Prob. 12.4APECh. 12 - Prob. 12.4BPECh. 12 - Prob. 12.5APECh. 12 - Prob. 12.5BPECh. 12 - Prob. 12.6APECh. 12 - Prob. 12.6BPECh. 12 - Redemption of bonds payable A 1,500,000 bond Issue...Ch. 12 - Prob. 12.7BPECh. 12 - Prob. 12.8APECh. 12 - Prob. 12.8BPECh. 12 - Prob. 12.9APECh. 12 - Prob. 12.9BPECh. 12 - Prob. 12.1EXCh. 12 - Prob. 12.2EXCh. 12 - Prob. 12.3EXCh. 12 - Prob. 12.4EXCh. 12 - Prob. 12.5EXCh. 12 - Prob. 12.6EXCh. 12 - Prob. 12.7EXCh. 12 - Entries for issuing and calling bonds; loss Adele...Ch. 12 - Entries for issuing and calling bonds; gain Emil...Ch. 12 - Entries for installment note transactions On the...Ch. 12 - Prob. 12.11EXCh. 12 - Entries for installment note transactions On...Ch. 12 - Prob. 12.13EXCh. 12 - Prob. 12.14EXCh. 12 - Prob. 12.15EXCh. 12 - Prob. 12.16EXCh. 12 - Present value of amounts due Tommy John is going...Ch. 12 - Present value of an annuity Determine the present...Ch. 12 - Prob. 12.19EXCh. 12 - Prob. 12.20EXCh. 12 - Prob. 12.21EXCh. 12 - Prob. 12.22EXCh. 12 - Amortize discount by interest method On the first...Ch. 12 - Prob. 12.24EXCh. 12 - Prob. 12.25EXCh. 12 - Prob. 12.26EXCh. 12 - Prob. 12.1APRCh. 12 - Prob. 12.2APRCh. 12 - Bond premium, entries for bonds payable...Ch. 12 - Prob. 12.4APRCh. 12 - Prob. 12.5APRCh. 12 - Prob. 12.6APRCh. 12 - Prob. 12.1BPRCh. 12 - Prob. 12.2BPRCh. 12 - Prob. 12.3BPRCh. 12 - Prob. 12.4BPRCh. 12 - Prob. 12.5BPRCh. 12 - Prob. 12.6BPRCh. 12 - Prob. 12.1CPCh. 12 - Prob. 12.2CPCh. 12 - Prob. 12.3CPCh. 12 - Preferred stock vs. bonds Xentec Inc. has decided...Ch. 12 - Prob. 12.5CPCh. 12 - Prob. 12.6CP
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