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Vilka [71]
3 years ago
7

Prepare the issuer's journal entry for each of the following separate transactions.

Business
1 answer:
Alekssandra [29.7K]3 years ago
5 0

Answer:

A. Dr Cash $327,500

Cr Common Stock $210,000

Cr Capital Paid In $117,500

B. Dr Cash $90,000

Cr Common Stock $90,000

C. Dr Inventory $59,000

Dr Machinery $185,000

Cr Note Payable $95,000

Cr Common Stock $80,000

Cr Capital Paid In $69,000

Explanation:

Preparation of the issuer's journal entry

A. Dr Cash $327,500

Cr Common Stock $210,000

(52,500 shares* $4 par value )

Cr Capital Paid In $117,500

($327,500-$210,000)

B. Dr Cash $90,000

Cr Common Stock $90,000

C. Dr Inventory $59,000

Dr Machinery $185,000

Cr Note Payable $95,000

Cr Common Stock (4000 * $20) $80,000

Cr Capital Paid In $69,000

($59,000+$185,000-$95,000-$80,000)

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6 0
3 years ago
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for t
elena55 [62]

Answer and Explanation:

Revenue                              $160,000

Rental Costs                      $30,000

Variable Costs                      $50,000

Depreciation                      $10,000

Profit before tax              $70,000

Tax(35%)                              $24,500

Net Income                      $45,500

Operating cash flow

a) Dollars in minus dollars out

Revenue ? rental costs ? variable costs ? taxes = $160000 -$30000-$50000-$24,500 = $55,500

b) Adjusted accounting profits

Operating cash flow = Net income + depreciation = $45,500 + $10,000 = $55,500

c) Add back depreciation tax shield

Operating cash flow = [(Revenue ? rental costs ? variable costs) × (1 ? 0.35)] + (depreciation × 0.35)]

= ($160,000-$30000-$50,000)*0.65 + $10,000*0.35 = $55,500

Yes, the above approaches result in the same value for cash flow

4 0
3 years ago
You’ve decided to buy a house that is valued at $1 million. You have $250,000 to use as a down payment on the house, and want
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Answer: $6581.58

Explanation:

Based on the information given in the question, the mortgage payment per month will be calculated thus:

= [P x I x (1+I)^N]/[(1+I)^N-1]

where,

P = Principal = $750000

I = Interest rate per month = 10%/12 = 0.10/12 = 0.008333

N = number of installments = 30 × 12 = 360

Then, the equated monthly installment will be:

= [750000 × 0.008333 × 1.008333^360] / [1.008333^360-1]

= [750000 × 0.008333 × 19.8350386989] / [19.8350386989 - 1]

= 123964/18.835

= 6581.58

Under this loan proposal, your mortgage payment will be $6581.58 per month.

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2 years ago
Buffalo National Corp. (BNC) is currently an all-equity firm worth $320 million with 50 million common shares outstanding. BNC p
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Answer:

The solution as per the given problem is provided below throughout the explanation portion below.

Explanation:

The given values are:

Debt issued,

= 120

Pretax earnings,

= 80

Tax,

= 35%

All equity firm,

= $320

Number of common stock,

= 50

(a)

Balance sheet before the debt issue's announcement will be:

<u>Assets </u><u>                                 320</u>

<u>Debt   </u><u>                                    0</u>

<u>Equity  </u><u>                                 320</u>

then,

The total will be "320".

(b)

The per share price will be:

= \frac{Equity}{Number \ of \ common \ stock}

= \frac{320}{50}

= 6.40

or,

After tax, the net income will be:

= EBIT(1-t)

= 80(1-0.35)

= 80\times 0.65

= 52

(c)

The return on equity will be:

= \frac{Net \ income \ after \ taxes}{Value \ of \ equity}

= \frac{52}{320}

= 0.1625

or,

= 16.25 (%)

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The residuals are observations of the error variable . Consequently, the minimized sum of squared deviations is called the sum o
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The statement in the question is True.

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3 years ago
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