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[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 $35 million gaming center. a. Issue $35 million, 7% note. b. Issue 1 million shares of common stock for $35 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 alternative. (Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Operating income Interest expense (note only) Income before tax Income tax expense (35%) Net income Number of shares Earnings per share (Net income /# of shares) $ Issue Note Issue Stock 11,000,000 $ 11,000,000 4,000,000 5,000,000

[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 $35 million gaming center. a. Issue $35 million, 7% note. b. Issue 1 million shares of common stock for $35 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 alternative. (Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Operating income Interest expense (note only) Income before tax Income tax expense (35%) Net income Number of shares Earnings per share (Net income /# of shares) $ Issue Note Issue Stock 11,000,000 $ 11,000,000 4,000,000 5,000,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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0 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 $35 million gaming center. a. Issue $35 million, 7% note. b. Issue 1 million shares of common stock for $35 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 alternative. (Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Operating income Interest expense (note only) Income before tax Income tax expense (35%) Net income Number of shares Earnings per share (Net income /# of shares) $ Issue Note 11,000,000 S Issue Stock 11,000,000 4,000,000 5,000,000
Transcribed Image Text:0 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 $35 million gaming center. a. Issue $35 million, 7% note. b. Issue 1 million shares of common stock for $35 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 alternative. (Enter your answers in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places.) Operating income Interest expense (note only) Income before tax Income tax expense (35%) Net income Number of shares Earnings per share (Net income /# of shares) $ Issue Note 11,000,000 S Issue Stock 11,000,000 4,000,000 5,000,000
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