Long-Term Liabilities: Bonds and Notes

Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock, $10 par — 700,000 Issue common stock, $5 par 840,000 560,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming income before bond interest and income tax is $336,000.