Laci inc is considering two alternatives to finance its

Assignment Help Accounting Basics
Reference no: EM13481804

Laci Inc. is considering two alternatives to finance its construction of a new $2.00 million plant. (a) Issuance of 200,000 shares of common stock at the market price of $10 per share. (b) Issuance of $2,000,000, 8% bonds at face value. Complete the following table, and indicate which alternative is preferable.  Issue Stock Issue Bond Income before interest and taxes $700,000 $700,000 Interest expense from bonds Income before income taxes Income tax expense (30%) Net income $ $ Outstanding shares 500,000 Earnings per share $ $ Net income is lowerhigher if stock is used. However, earnings per share is higherlower than earnings per share if bonds are used because of the additional shares of stock that are outstanding.

Reference no: EM13481804

Questions Cloud

Use incremental revenue and incremental costs to compute : company a is scheduled to produce 40000 units and have thecapacity to produce 55000 units. budgeted cost for
A columnar schedule used to summarize accounting data often : nbspnbspnbspnbsp1.nbspnbspnbspnbspaccounts that are not closed to a zero balance at the end of each
General matters outstanding bond issue has a coupon rate of : general matters outstanding bond issue has a coupon rate of 8.4 and it sells at a yield to maturity of 7.50. the firm
Platinum corporation purchased machinery on january 1 2007 : platinum corporation purchased machinery on january 1 2007 at acost of 160000. the machinery has an estimated useful
Laci inc is considering two alternatives to finance its : laci inc. is considering two alternatives to finance its construction of a new 2.00 million plant. a issuance of 200000
A system of accounting in which revenues and expenses are : nbspnbspnbspnbsp1.nbspnbspnbspnbspaccounts that are not closed to a zero balance at the end of each
Prepare a schedule calculating the effect of : keelson enterprises manufactures automobiles and occasionallymakes small investments in other corporations for
Besides comparability as stated what other factors might : ifrs reporting rules that apply in many countries outside the u.s permit management to for example revalue long lived
Dtermine the depreciation expense for 2007 under the a : acme company purchased equipment on january 1 2007 at acost of 180000. the equipment is expected to have a useful

Reviews

Write a Review

Accounting Basics Questions & Answers

  Harrisburg company which began business in early 20x7

harrisburg company which began business in early 20x7 reported 40000 of accounts receivable on the december 31 20x7

  Determining time and material pricing method

With the time and material pricing method, the hourly time charge is typically set equal to:

  Income statement prepared for business enterprise

Use by customers to determine a company"s ability to provide needed goods and services. 21. Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

  What are the recognized gain or loss

Raymond exchanges a rental lake house with an adjusted basis of 200,000 and fair market value of 320,000 for a rental beach house with a fair market value of 290,000 and 30,000 cash what are the recognized gain or loss and the basis of the beach h..

  Estimate the amount of the unadjusted cash balance per

the following data apply to superior auto supply inc. for may 2012.1.balance per the bank on may 31 8000.2.deposits in

  Earning normal profit in the long run

A firm will only earn normal profit in the long run: a) if firms can freely enter or leave the market b) if firms do not try to maximize profit c) only if the industry is perfectly competitive d) whenever products are not differentiated

  Manufacturing cycle time

Wait time to the start of production 5.0 days, Delivery Cycle time 18 days, Move time 3.0 days, Inspection time 2.5 days, Queue Time during the production process 3.5 days.

  The board of directors declared a stock dividend

A corporation had 13,500 shares of $5 par value common stock outstanding when the board of directors declared a stock dividend of 4,995 shares. At the time of the stock dividend, the market value per share was $19. The entry to record this div..

  Options for valuing inventory

We need to discuss what these options are, how they effect the financial reports, and which one(s) are most beneficial given various goals. Start by describing each of the options for valuing inventory.

  Compute the rate variance, the efficiency variance

Compute the rate variance, the efficiency variance, and the total direct labor cost variance for each of these two months. (Input all amounts as a positive value.

  What are the primary documents supporting a job

What are the primary documents supporting a job order costing system and what purposes are served by each of them and how does information from a job order costing system support management decision making?

  Average cost per unit for fixed manufacturing overhead

Assume that the company produced the equivalent of 11,700 units of product during the year just completed. What was the average cost per unit for direct materials? What was the average cost per unit for fixed manufacturing overhead?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd