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3 years ago

How would the issuance of common stock for cash affect the accounting equation?

Business

1 answer:

shepuryov [24]3 years ago

3 0

Answer:

Explanation:

The journal entry to record the given transaction is shown below:

Cash A/c Dr XXXXX

To Common stock A/c XXXXX

(Being the issuance of the common stock is recorded)

The accounting equation is

Total Assets = Total liabilities + Stockholder equity

Cash Increased = No effect + Increased

Therefore, the cash account and the common stock is increased.

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Taylor Bank lends Guarantee Company $117,933 on January 1. Guarantee Company signs a $117,933, 9%, nine-month note. The entry ma

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Answer:

January 1, 202x, bank loan obtained from Taylor Bank (9 months, 9% interest rate)

Dr Cash 117,933

Cr Notes payable 117,933

Explanation:

Since this is an interest bearing note that will be paid in less than a year, we should record it at face value. All current liabilities must be recorded at face value.

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3 years ago

Petromax Enterprises uses a continuous review inventory control system for one of its SKUs. The following information is availab

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Answer:

Economic order quantity= 1406 units
Safety Stock= 630 units
Reorder Point= 14130 units

Explanation:

Given Demand D= 78,000units/year

Ordering cost S = $38.00/order

Holding cost H = $3.00unit/year

Average lead time = 9 weeks

Standard deviation of weekly demand = 120 units

a) Economic order quantity:

EOQ = \sqrt{(2*D*S)/H}

EOQ = \sqrt{(2*78000*38)/3}

1405.7 = 1406 Units

b) Safety Stock:

Weekly demand = 78000/52 =1500 units

Standard deviation of weekly demand = 120 units

Lead time is 9 weeks

Using the normsinv() in excel the Z value for the desired 96% service level is 1.75

Safety stock = z\sigma _{d}\sqrt{L}

= 1.75*120*\sqrt{9}

= 630 units

Reorder point = average lead time demand + safety stock

= lead time * weekly demand + saftey stock

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Reorder point = 14130

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3 years ago

Read 2 more answers

Which best describes what a market index does?

melisa1 [442]

A market index is a resulting value created from the combination of several stocks and other investment vehicles presenting its total value against a base value at a certain period. It is used to show the whole stock market at the same time keeping track with the way the market changes overtime. The practice of tracking the value of the stock market over a period of time can be used to benchmark to make a credible comparison of stock returns.

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3 years ago

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Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate 6.4%. Assuming the stock market i

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Answer:

Yes, Stock A has higher dividend yield

Explanation:

given data

market risk premium = 6.0%

risk-free rate = 6.4%

A B

Beta 1.10 0.90

Constant growth rate 7 % 7%

to find out

does stock A has higher dividend yield than Stock B

solution

we get here Stock A rA = 6.4% + 1.1 × 6%

Stock A rA = 13.00%

and

Dividend yield of stock A = rA - g

Dividend yield of stock A = 13.00% - 7%

Dividend yield of stock A = 6%

and

for Stock B rB = 6.4%+ .9 × 6%

Stock B rB = 11.80%

and

Dividend yield of stock B = rA - g

Dividend yield of stock B = 11.80% - 7%

Dividend yield of stock B = 4.80%

so we can say Yes, Stock A has higher dividend yield

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3 years ago

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The democratic style of leadership seeks information, opinions, and preferences, sometimes to the point of meeting with the group, leading discussions, and using consensus or majority vote to make the final choice.

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3 years ago

How would the issuance of common stock for cash affect the accounting​ equation?

How would the issuance of common stock for cash affect the accounting equation?