WileyPLUS S Weygandt Accounting Principles 120 Principles of

WileyPLUS S Weygandt, Accounting Principles, 120 Principles of Accounting 12e (ACC 171/za Gradebook ORION Downleadable eTextbook Exercise 15-12 1 Issue 90,000 shares of common stock at $30 per share. (Cash dividends have not been paid nor is the payment of any contempianed 2. issue 10%, l ear bonds at face value for S2·700,000. It is estimated that the company will earn $800,000 before interest and taxes as a result of this purchase. The company has an esbmated tax rate of 30% and has 120,000 shares of common stock outstanding prior to the new financing Determine the effect on ret income and eammpl per share for these two methods of financing. (Round earnings per share to 2decinal plates, e.g. 2.2%) Plan One Issue Stock Plan Two Net income Earmings per share Question Attempts: o of 5 used AVEPOR LATE command option

Solution

ALT -2 ISSUE BOND EBIT 8000000 LESS INT 270000 0.1*2700000 EBT 7730000 LESS TAX 2319000 30% *EBT EAT/NET INC 5411000 DIVIDE NO. OF SHARES 120000 EPS 45.09167 ALT-1 ISSUES STOCK EBIT 8000000 LESS INT EBT 8000000 LESS TAX 2400000 EAT/NET INC 5600000 DIVIDE NO. OF SHARES 210000 120000 + 90000 EPS 26.66667 DR CR 1 PAYMENT OF INT INTREST PAYBLE A/C   DR 112000 TO CASH/BANK 112000 2 REDEMPTN OF BOND BONDS PAYBLE 1600000 REDEMPTION ON PREMIUM 48000 TO CASH/BANK 1648000 3 ACCRUAL OF INT INTEREST EXPENSE DR 112000 INTEREST PAYBLE 112000