ZedCon Inc. intends to raise $10,000,000 for the purpose of expanding operations internationally. Two options are available: • Plan 1: Issue $10,000,000 of 5% bonds payable due in 2024, or • Plan 2: Issue 100,000 common shares at $100 per share. The expansion is expected to generate additional annual income before interest and tax of $800,000. ZedCon’s tax rate is 35%. The assumed adjusted trial balance at December 31, 2015, one year after the expansion under each of Plan 1 and Plan 2, is shown below:
Required Preparation Component: 1. Prepare a single-step income statement for 2015 (showing salaries expense, depreciation expense, cost of goods sold, interest expense and other expenses) and a classified balance sheet at December 31, 2015, assuming: a. Plan 1, and Then b. Plan 2. Analysis Component: Which financing plan should ZedCon Inc. choose assuming its goal is to: a. Maximize earnings per share, or b. Maximize net income. Explain your answers showing any relevant calculations (rounded to the nearest wholecent).