BSF Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 10% (issued...

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BSF Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 10% (issued...

BSF Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,050,000 Preferred 2% stock, $20 par 1,050,000 Common stock, $25 par 1,050,000 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 $483,000. $ per share

b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $588,000. $ per share

c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $693,000. $ per share

business accounting

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Answer 1

Answer #1

Calculate earning per share

	a	b	c
Earning before interest and income tax	483000	588000	693000
Less: Interest expense	-105000	-105000	-105000
Earning before tax	378000	483000	588000
Less: Income tax	-226800	-289800	-352800
Net income	151200	193200	235200
Less: Preferred dividend	-21000	-21000	-21000
Earning for common Stockholders	130200	172200	214200
Share outstanding	42000	42000	42000
Earning per share	3.10	4.10	5.10

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Answer 2

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