Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 1

Effect of financing on earnings per share
Domanico Co., which produces and sells biking equipment, is financed as follows:

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) $10,500,000, (b) $11,800,000, and (c) $13,000,000.