1. 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)	$1,550,000
Preferred $2 stock, $20 par	1,550,000
Common stock, $25 par	1,550,000

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) $589,000, (b) $744,000, and (c) $899,000.

Enter answers in dollars and cents, rounding to two decimal places.

a. Earnings per share on common stock $fill in the blank 1

b. Earnings per share on common stock $fill in the blank 2

c. Earnings per share on common stock $fill in the blank 3

2.

1. Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method

   On the first day of its fiscal year, Chin Company issued $21,300,000 of five-year, 4% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 6%, resulting in Chin Company receiving cash of $19,482,982.

   a. Journalize the entries to record the following:

   1. Issuance of the bonds.
   2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
   3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)

   For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.

   1.		fill in the blank 230a2106bf90049_2	fill in the blank 230a2106bf90049_3
   		fill in the blank 230a2106bf90049_5	fill in the blank 230a2106bf90049_6
   		fill in the blank 230a2106bf90049_8	fill in the blank 230a2106bf90049_9
   2.		fill in the blank 230a2106bf90049_11	fill in the blank 230a2106bf90049_12
   		fill in the blank 230a2106bf90049_14	fill in the blank 230a2106bf90049_15
   		fill in the blank 230a2106bf90049_17	fill in the blank 230a2106bf90049_18
   3.		fill in the blank 230a2106bf90049_20	fill in the blank 230a2106bf90049_21
   		fill in the blank 230a2106bf90049_23	fill in the blank 230a2106bf90049_24
   		fill in the blank 230a2106bf90049_26	fill in the blank 230a2106bf90049_27

   b. Determine the amount of the bond interest expense for the first year. $fill in the blank 35abd7093015fa1_1

   c. Why was the company able to issue the bonds for only $19,482,982 rather than for the face amount of $21,300,000? The market rate of interest is the contract rate of interest.