Inkle,Inc.has $200,000 of 10% bonds outstanding (which pay $20,000 interest)and $100,000 of 12% preferred stock (which pay $12,000 dividends).Assume that Inkle's earnings in the upcoming year will be either $50,000 or $100,000.Given these two possibilities,common stockholders' share of earnings will be either ________ or ________.

Question

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The common stockholders' share of earnings is calculated by subtracting the interest on bonds and preferred stock dividends from the total earnings. For $50,000 earnings: $50,000 - $20,000 (interest) - $12,000 (dividends) = $18,000. For $100,000 earnings: $100,000 - $20,000 (interest) - $12,000 (dividends) = $68,000.

Inkle,IncHas $200,000 of 10% Bonds Outstanding (Which Pay $20,000 Interest)and