Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,650,000 Preferred $1 stock, $10 par 1,650,000 1,650,000 Common stock, $25 par 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) $808,500, (b) $973,500, and (c) $1,138,500 Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock b. Earnings per share on common stock $ c. Earnings per share on common stock $

Eifect of Finanong on Earnings per Share Herriksen Co4, 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 mock, assurning that the income before bond intereot and incorne tax is (a) $808,500,(b)$973,500, and (c) 51,138,500 Enter answers in dollars and cents, rounding to two decimal ploces. a. Earnings per share on common stock 1 b. Earnings per share on common stock 1 C. Earnings per share on common stock 1 Abioye Co. produces and distributes semiconductors for use by computer manutacturers. Abicye Co. issued 5350,000 of 10-year, 11\% bonds on May 1 of the currerit year at tace vatue, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year: Required: Joumalize the entries to mocord the following selected transactions for the cunbnt year Refer to the chart of accounts for the exact wortirg of the account fites. CNOW joumals do not use lines for joumal explanadons. Every hine on a pounal page is used far debt or ceedt entres CNow joumals wil automatically indent a credi entry when a crodit amount is entered. May 1 Issued the bonds for cash at their tace amount Nov: 1 Paid the interest on the bonds Dec. 31 Recorded accrued interest for two montha General Ledger 151 Prepaid lnsurance 191 Land 192 Store Equipment 193 Accumulated Depreciabon-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Otice Equipment LIABILTIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 522 Onfice Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Ofice Supplies Eqense 533 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Nemreciation. Fmense.ntfice Eouinment 1272 tentereit Paruahis 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 tnterest Expense 711 Loss on Redernption of Bonds EQUITY 311 Common Stock 312 Paid-in Capital in Excess of Par-Cammon Stock 315 Treasury Stock 321 Preferred Stock 322 Paid - In Capital in Excess of Par-Preferred Stock 311 Common Stock 312 Paid-ln Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322. Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Eamings 351 Gash Dividends 352 Stock Dividends Joumalize the transactions. Refor to the chart of accounts for the exoct wording of the account tities. CNOW joumals do not use lines for poumal explanatiars. Every ande on a kurna page is used for debit or credit entres. CNOW/joumals wil automabically indent a credt entry when a credit amount is entered On January 1, the first day of its fiscal year, Jacinto Company issued $21,300,000 of five-year, 4% bonds to finance is operations of producing and seting bome improvement products Interest is payable semiannually. The bonds were issued at a market (elfective) interest rate of 5%, resulting in Jacinto Company receking cash of 520,367.935. Required: a. Soumaise the entries to record the following frefer to the chart of accounts for the exact wording of the account tides cNow ournals dod not use liries for joumal explanntions Every ine on a joumal page is used for debit or creall entries CNOWjorumals wal audomatealiy indent a crodit entry when a credit amount is entered) 1 Isstaane of the bonds 2. Fint cemannual interest poyment. The bond discount amorfization, using the strnight-dine mothod, is combined with ithe semiannuat interest payment. (Round your answer to the nearest dollar.) 3 Second semiannual interest payment. The bond discourt amontzation, using the straight-ine method, is combined with the samiannual interest payment (Round your answer to the nearest dollac.) a. Joumalize the entries to record the transactions. Refer to the chart of accounts for the exact wording of the account alibes CNOW joumals do not use lines for joumat expinnotions Every line on a joumal poge is used for dobit or credit entries. CNOW joumals wil autamatically indent a credt entry when a credt amount is entered Round your answer to the nearest dollar b. Defermune the amount of the bond interest expense for the first year. c. Explain why the compary was abie to issue the bonds for only $20,367,936 rather than for the face amount of $21,300,000. The bonds sell for less than their face amount becasse the market rate of interest in face amount for bonds that pay a lover contract rate of interest than the rate they cr the contract rate of interest. Investoes ar bonds (market rate) willing to pay the fill willing to pay the full Favreau Corporation wholesales repair products to equipment manufocturens. On April 1, Year 1, Faveau Corporation issied $23,100,000 of five-year, 5% bonds at a market (effective) interest rate of 8%, recehving cash of $24,036,717. Interest is payable semiannualy an Apeil 1 and October 1. Required: a. Joumakize the entries to recond the following. Refer to the chat of accounts for the exact wording of the account tafes. CNOW joumals do not use lines for journat explanadions. Every ine on a journal page is used for debit or credit entries cNow journals wit abitomaticaly indent a credit entry when a credit amount is entered 1. issuance of bonds on Appli. 2. First interest payment on October f and amortication of bond premium for six months, using the straght- Wine method. Mhe bond premium amortization is combined with the semiannual interest payment, (Roend to the nearest dollar). b. Expiain why the company was able to issue the bonds for $24,036,717 rather than for the face amount of $23, 100, 000. a. Joumalie the entries. Refer to the chart of accouints for the exsct wording of the account tules CNOW journals do not use dnes for joumal explanations Evey ane on a fumat poge is used for dobit or crodit entries. CNOW journals wit automaticaly indent a credit entry when a credit amount is entered. B. Explain why the company was able to issue the bonds for $24,036,717 rather than tor the face amourt of $23,100,000 The boeds sel for more than their face amount because the market rate of inferest is The contract rate of inlerest: Investor wiling to pay more bonds that pay a higher rate of inlerest (contract rate) than the rate they could eam o narkel rale): a. Joumalize the entries. Refer to the chart of accounts for the exact wording of the account titles. CNOWjournals do not use lines for joumal explasabions. Every line on a journad page is wsed for debit or credit entries. CNOW joumats will automatically indent a credit entry when a credit amount is entered Rushton Corp, a wholesaler of music equipment, issued 533,100,000 of 20 -year, 4% callahle bonds on Mareh 1, 20r1, at their face amount, with interest pryable on March 1 and Seplember 1. The fiscal year of the company is the casendar year Required: Joumalize the entries to record the following selected transactions. Refer to the chart of accounts for the exact wording of the accoumt tifen: CNOW joumats do nof use lines for joumal explionations. Every line on a poumal page is used for debat or credit entries. CNOW journals will automaticaly indent a credit entry when a credit amount is entered 20Y1 Mar. 1 Issued the bonds for cash at ther face amouat Sept 1 Paid the interest on the bonds 20Y5 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture comi entry for payment of Joumalize the entries to record the 20y transactions: Refer to the chart of accounts for the exact wording of the account bales. CNOW journats do not use Whes for joumal explanations. Every lone on a joumal page is used for dobut or credit entnes. CNOW joumals will automatically indent a credit entry when a credit amount is entered Emi Corp. produces and sels wind-energy-diven engines. To finance its operations, Emil Corp. tssued 533,100,000 of 20-year, 4\%, callable bonds on May 1, 201, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the corpany is the calendar year Required: Joumalize the entries to record the following selocted transactions. Refer to the chart of accounts for the exact wording of the account tales. CNOW joumals do not use lines for joumal explanotions. Every ine on a journal pnge is used for debrt or credi entries. GNOWy joumals will automaticaly indent a credh entry whien a credl amount is entered 20Y1 May 1. Issued the bonds for cash at their face amount. Nov 1 Paid the interest on the bonds. 20Y5 Noy 1 Called the bond issue at 93, the rate provided in the bond indenture (Onit entry for payment of Joumblize the entries to record the selected transactions. Refor to the chart of accounts for the exact wording of the acoount tties. CNOWjournais do not use lines for joumny explanations. Every uine on a joumal poge is used for debir or crodit entries. CNOW joumals wiw audomatically indent a credt entry when a credit amount is entered. On January 1, Year 1, Wedekind Company issued a 5242,000 , five-year, 11\% installment note to Shannon Bank. The note requires anmuat payments of S65,478, beginning on December 31, Year 1. Reguired: Joumalize the entries to rocord the following transactions. Refer to the chart of accounts for the exact worting of the account tinles. CNOW joumals do not use lines for journal explangtons. Evecy line on a journal poge is used for debit or credit entries. CNow joumala wit aufomabically indent a creda entry when a credit amount is entered Joumstize the entries to record the transactions. Feffer to the chart of accounts for the exact worting of the account tates. CNow joumsis do not use ines far jobmal explinabons: Every line on a jocmal poge is used for debit or credit entres. CNOw joumals will audomatcally indent a credt entry when a credt amourt is entered. The following transactions were completed by Winklevoss Inc. whose fiscal year is the calendar year: Year 1 July 1 Issued $75,100,000 of 20-year, 8% callable borids dated July 1, Year 1 , at a market (eflective) rate of 10\%. receiving cash of $62,213,861. Interest is payable semiannually on Decernber 31 and June 30 . Oct Borrowed $440,000 by issuing a six-year, 7% instillment note to Nicks Bank. The note requires annual payments of $92,310, with the first payment occuring on September 30 , Year 2. Dec 31 Accrued 57,700 of interest on the instaliment note. The interest is payable on the date of the nexd instaliment note payment 31 Paid the semiannual interest on the bonds. The bond discount amortization of 5322,153 is combined Whth the semiannual interest payment. Instructions Year 2 June 30 Paid the semiannual interest on the bonds. The bond discount arnortization of $322,153 is combined with the semiannual interest payment. Sept. 30 Paid the annual payment on the note, which consisted of interest of $30,800 and principal of $61,510 Dec. 31 Accrued $6,624 of interest on the installment note. The interest is payable on the date of the nend installment note payment. 31 Paid the semiannuat interest on the bonds. The bond discount amortization of $322,153 is combined with the semiannuat interest payment. Year 3 June 30 Recorded the redemption of the bonds, which were called at 98 . The balance in the bond discount account is \$11,597,527 after payment of interest and amorization of discount have been recorded. Record the redemption only account is \$11,597,527 after payment of interest and amortization of discount have been recorded Record the redemption only. Sept. 30 Paid the second annual payment on the note, which consisted of interest of 526,494 and principal of $65,816 Required: 1. Joumalize the entries to record the foregoing transactions. Refer to the chart of accounts for the exact wording of the account titles. CNOW joumals do not use lines for joumat explanations Every line on a journal page is used for debit or credit entries. CNOWjournals will audomaticaly indent a credit entry when a credit amount is entered. Round all amounts to the nearest dollar: 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2 3. Defermine the carrying amount of the bonds as of December 31, Year 2 1. Joumalize the entries to record the foregoing transactions. Refer fo the chart of aceounts for the exact wording of the account tides. CNOWjoumals do not use lines for joumal explanations. Every line on a journal poge is used for debit or credit entries CNOW joumals wil automobically indent a crede endry when a credit amount is entered Round all amounts to the nearest ofllder. Year 1 Journal On July 1, Year 1, Khatri Industries Inc. issued $48,800,000 of 10 -year, 9% bonds at a market (eflective) inlerest rate of 11%, receiving cash of 542,968,258 payable semiannually on December 31 and June 30 . The fiscal year of the company is the calendar year: Required: 1. Joumslize the entry to record the amount of cash proceeds from the issuance of the bonds on duly 1, Year 1 ., 2. Joumalize the entries to record the following * a. The first semiannuar interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method Round to the nearest dollar. b. The interest payment on Jure 30 , Year 2, and the amortization of the bond discount, using the straight-line method Round to the nearest dollar. 3. Determine the total interest expense for Year 1 4. Wil the bond proceeds atways be less than the face amount of the bonds when the coritract rate is less than the market rate of interest? the problem requirements Prakent Valun of $1 at Comnound Interest Due in n Periods 1. Joumalize the entry to record the amount of cash proceeds from the isssisice of the bonds on Judy 1. Year 1 . Refer to the chart of accounts for the exact wonding of the account when a credit amount is entered. 3. Determine the total interest expense for Year 1. 4. WIl the bond proceeds aways be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes No 5. Compute the price of $42,968,258 recened for the bonds by using the tables shown in Present Value Tables. Round to the nearest dollar. Final Questions Yes No 5. Compute the price of $42,968,258 received for the bonds by using the tables shown in Present Value Tabies. Round to the nearest dollar