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ACC 557 Week 6 Chapter 10 (E10-9, E10-12, E10-15, P10-1A)
E10-9: Global Airlines is considering two alternatives for the
financing of a purchase of a fleet of airplanes. These two
alternatives are: ............
It is estimated that the company will earn $800,000 before interest
and taxes as a result of this purchase. The company has an
estimated tax rate of 30% and has 90,000 shares of common stock
outstanding prior to the new financing.
Determine the effect on net income and earnings per share for
these two methods of financing. ............
E10-12: Pueblo Company issued $300,000 of 5-year, 8% bonds
at 98 on January 1, 2014. The bonds pay interest twice a year.
a)
Prepare the journal entry to record the issuance of the
bonds. ............
Compute the total cost of borrowing for these bonds.
b)
Prepare the journal entry to record the issuance of the
bonds, assuming the bonds were issued at 104. ............
Compute the total cost of borrowing for these bonds, assuming
the bonds were issued at 104. ............
E10-15: Tucki Co. receives $240,000 when it issues a
$240,000, 8%, mortgage note payable to finance the construction
of a building at December 31, 2014. The terms provide for
semiannual installment payments of $17,660 on June 30 and
December 31.