Answer: 1,125,000
Explanation:
Break even point simply means when the total cost and the total revenue are equal.
Firstly, we need to calculate the cash related fixed cost for Boise Timber Co. This will be:
= Total fixed cost - Depreciation
= $6,000,000 - (25% × $6,000,000)
= $6,000,000 - (0.25 × $6,000,000)
= $6,000,000 - $1,500,000
= $4,500,000
The cash break-even point will be:
= $4,500,000/$4
= 1,125,000
Answer:
Journal Entry to be recorded
DR. Land $475,000
Cr. Common stock $312,500
Cr. Add-in-capital common stock $162,500
Explanation:
Number of Shares = 12,500 shares
Share Market price = $38
Share Par Value = $25
Total value of property to be recorded= 12,500 x $38 = $475,000
Common stock value at par = 12,500 x $25 = $312,500
Add-in-Capital common stock value = $475,000 - $312,500 = $162,500
Property will be recorded as the total value of exchange which is $475,000. On other other hand the common stock value will be recorded in two parts common stock at par value and add-in-capital common stock over par value.
