Instructions:1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $4,400,000.Earnings per share of common stockPlan 1$per sharePlan 2per sharePlan 3per share2. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $2,090,000.Earnings per share of common stockPlan 1per sharePlan 2per sharePlan 3per share3. Regarding the three plans, which of the following statements is true? Three different plans for financing a $2,200,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par orface amount, and the income tax rate is estimated at 40% of income.Plan 1Plan 2Plan 310% bonds$1,100,000Preferred 10% stock, $100 par$1,100,000550,000Common stock, $2.2 par$2,200,0001,100,000550,000Total$2,200,000$2,200,000$2,200,000Round the answers to nearest cent.

Answer Calculation of interest Plan 1. No of comman stock = $2,200,000 /2.2 = 1,000,000 Plan 2…

Instructions: 1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $4,400,000. Earnings per share of common stock Plan 1 per share Plan 2 per share Plan 3 per share

Instructions: 1. Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $4,400,000. Earnings per share of common stock Plan 1 per share Plan 2 per share Plan 3 per share

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter8: Liabilities And Stockholders' Equity

Section: Chapter Questions

Problem 8.1.3P

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