makami4 Posts: 13, Reputation: 1 New Member #1 Oct 5, 2012, 12:19 PM
Effect of Financing on Earnings per Share-I need help please!
Effect of Financing on Earnings per Share

Kelton Co. which produces and sells skiing equipment, is financed as follows:

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) \$10,000,000, (b) \$12,000,000, and (c) \$14,000,000.

Enter answers in dollars and cents, rounding to the nearest whole cent.
 paraclete Posts: 2,706, Reputation: 172 Ultra Member #2 Oct 5, 2012, 03:57 PM
1 this is an incomplete question
2 we don't provide model answers to assignment questions
3 tell us what your question is, we like to see your attempts at answering the question
 makami4 Posts: 13, Reputation: 1 New Member #3 Oct 5, 2012, 07:37 PM
I'm apologized for the incomplete question. The reason why I ask for help is because I don't have any accounting acknowledgement and this something completely new for me.. I don't expect you give me the answers but I will really appreciate if you can help me the steps to get the right answer since in the textbook is very complicated for me to understand what they say.thanks!
Effect of Financing on Earnings per Share

Kelton Co. which produces and sells skiing equipment, is financed as follows:

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) \$10,000,000, (b) \$12,000,000, and (c) \$14,000,000.

Enter answers in dollars and cents, rounding to the nearest whole cent.

a. Earnings per share on common stock \$

b. Earnings per share on common stock \$

c. Earnings per share on common stock \$
 paraclete Posts: 2,706, Reputation: 172 Ultra Member #4 Oct 5, 2012, 08:14 PM
In order to get the earnings per share you need to know the number of shares issued
It was for this reason I said the question is incomplete, that number isn't included
Repeating the text doesn't make anything any clearer

http://www.investopedia.com/terms/e/...#axzz28U9kr6pg

Reading the text of your question suggests other data is also not included including what ever was in the text box that didn't copy over
 makami4 Posts: 13, Reputation: 1 New Member #5 Oct 6, 2012, 10:50 AM
Originally Posted by paraclete
In order to get the earnings per share you need to know the number of shares issued
It was for this reason I said the question is incomplete, that number isn't included
repeating the text doesn't make anything any clearer

Earnings Per Share (EPS) Definition | Investopedia

reading the text of your question suggests other data is also not included including what ever was in the text box that didn't copy over
Sorry to not add the numbers:
Bond payable, 8% (issued at face amount) \$20,000,000
Preferred \$2 stock, \$10 par \$20,000,000
Common stock, \$25 par \$20,000,000
 paraclete Posts: 2,706, Reputation: 172 Ultra Member #6 Oct 6, 2012, 03:04 PM

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