Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each (Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings to 2 decimal places.) Issue Note Issue Stock 24 9,000,000 S 9,000,000 Operating income Interest expense (note only) Income before tax Income tax expense (40%) Net income 24 0 $ Number of shares 2,000,000 3,000,000 Earnings per share (Net income / # of shares)
Required: 1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each (Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings to 2 decimal places.) Issue Note Issue Stock 24 9,000,000 S 9,000,000 Operating income Interest expense (note only) Income before tax Income tax expense (40%) Net income 24 0 $ Number of shares 2,000,000 3,000,000 Earnings per share (Net income / # of shares)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below.]
Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $15 million gaming
center:
a. Issue $15 million, 5% note.
b. Issue 1 million shares of common stock for $15 per share.
Required:
1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each a
(Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings
to 2 decimal places.)
Issue Note
Issue Stock
Operating income
9,000,000 S
9,000,000
Interest expense (note only)
Income before tax
Income tax expense (40%)
Net income
0.
Number of shares
2,000,000
3,000,000
Earnings per share (Net income /# of shares)
%24
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F629de615-5c09-4318-9c6a-8a630fd450bc%2F04efb468-1473-4eed-b9e0-4ae5e3ca96a5%2Foeq089_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $15 million gaming
center:
a. Issue $15 million, 5% note.
b. Issue 1 million shares of common stock for $15 per share.
Required:
1. Assuming the note or shares of stock are issued at the beginning of the year, complete the income statement for each a
(Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings
to 2 decimal places.)
Issue Note
Issue Stock
Operating income
9,000,000 S
9,000,000
Interest expense (note only)
Income before tax
Income tax expense (40%)
Net income
0.
Number of shares
2,000,000
3,000,000
Earnings per share (Net income /# of shares)
%24
%24
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