671 Chapter 14 Long-Term Liabilities: Bonds and Notes EX 14- 1 Effect of financing on earnings per share OBJ. 1 Domanico Co., which produces and sells biking equipment, is financed as follows Bonds payable, 8% (issued at face amount) Preferred 5% stock, $10 par Common stock, $20 par $10,000,000 10,000,000 10,000,000 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) $10,500,000, (b) $11,800,000, and (c) $13,000,000