The Lopez-Portillo Company has $11.8 million in assets, 80 percent financed by debt and 20 percent financed by common stock. The interest rate on the debt is 14 percent and the par value of the stock is $10 per share. President Lopez-Portillo is considering two financing plans for an expansion to $24 million in assets. Under Plan A, the debt-to-total-assets ratio will be maintained, but new debt will cost a whopping 17 percent! Under Plan B, only new common stock at $10 per share will be issued. The tax rate is 40 percent. a. If EBIT is 15 percent on total assets, compute earnings per share (EPS) before the expansion and under the two alternatives. (Round your answers to 2 decimal places.)
Earnings Per Share
Current $
Plan A $
Plan B $
b. What is the degree of financial leverage under each of the three plans? (Round your answers to 2 decimal places.)
Degree Of Financial Leverage
Current
Plan A
Plan B

The law firm of furlan and benson accumulates costs associated with individual cases, using a job order cost system. the following transactions occurred during july: jul. 3 charged 175 hours of professional (lawyer) time to the obsidian co. breech of contract suit to prepare for the trial, at a rate of $150 per hour. 10 reimbursed travel costs to employees for depositions related to the obsidian case, $12,500. 14 charged 260 hours of professional time for the obsidian trial at a rate of $185 per hour. 18 received invoice from consultants wadsley and harden for $30,000 for expert testimony related to the obsidian trial. 27 applied office overhead at a rate of $62 per professional hour charged to the obsidian case. 31 paid administrative and support salaries of $28,500 for the month. 31 used office supplies for the month, $4,000. 31 paid professional salaries of $74,350 for the month. 31 billed obsidian $172,500 for successful defense of the case. required: a. provide the journal entries for each of these transactions. refer to the chart of accounts for exact wording of account titles. b. how much office overhead is over- or underapplied? c. determine the gross profit on the obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.