(b) Issuance of $2 million, 8% bonds at face value. Complete the following table, and indicate which alternative is preferable. Issue Bond $700,000 Issue Stock $700,000 Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (30%%) Net income Outstanding shares Earnings per share 24 500,000

(b) Issuance of $2 million, 8% bonds at face value. Complete the following table, and indicate which alternative is preferable. Issue Bond $700,000 Issue Stock $700,000 Income before interest and taxes Interest expense from bonds Income before income taxes Income tax expense (30%%) Net income Outstanding shares Earnings per share 24 500,000

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 6CP: You hold a 25% common stock interest in YouOwnIt, a family-owned construction equipment company....

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