FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On December 31, 2022, the equity accounts of Book Creations, Inc., contained the following balances:
Common stock ($10 par, 100,000 shares authorized) 30,000 shares issued and outstanding | $300,000 |
$476,600 | |
For the year 2022, the corporation had net income before income taxes of $176,300, income taxes of $35,260, and net income after taxes of $141,040. The corporation’s tax rate is 20 percent.
An expansion of the existing plant at a cost of $564,300 is planned. The corporation’s president, who owns 60 percent of the corporation’s common stock, estimates that the expansion would result in an increased net income of approximately $176,300 before interest and taxes. The financial vice president
Management is considering two possibilities for financing:
- Issuance of 20,000 additional shares of common stock for $29 per share.
- Issuance of $564,300 face amount, 10-year, 6 percent bonds payable, secured by a mortgage lien on the plant.
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