BE15-6 Bondorf Inc. issues a 5600,000,10%,10-year mortgage note on December 31, 2012, to obtain financing...
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BE15-6 Bondorf Inc. issues a 5600,000,10%,10-year mortgage note on December 31, 2012, to obtain financing for a new building. The terms provide for semiannual installment payments of $48,145. Prepare the entry to (a) record the mortgage loan on December 31, 2012, and (b) the first installment payment. E15-2 Bohlander Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: 1. Issue 60,000 shares of common stock at $45 per share. (Cash dividends have not been paid nor is the payment of any contemplated). 2. Issue 10%,10-year bonds at face value for $2,700,000. It is estimated that the company will earn $800,000 before interest and taxes because 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. Instructions Determine the effect on net income and eamings per share for these two methods of financing. In case of stock issue Net income
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