Penny Arcades, Inc., is trying to decide between the following two alternatives to finance its new $22 million gaming center:

a. Issue $22 million of 7% bonds at face amount. b. Issue 1 million shares of common stock for $22 per share.

Required: 1. Assuming bonds or shares of stock are issued at the beginning of the year, complete the income statement for each alternative. (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000). Round your "Earnings per Share" to 2 decimal places. Round your "Earnings per Share" to 2 decimal places.)

	Issue Bonds	Issue Stock
Operating income	$9,700,000	$9,700,000
Interest expense (bonds only)
Income before tax
Income tax expense (35%)
Net income	$0	$0
Number of shares	2,700,000	3,700,000
Earnings per share