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Scrat [10]
3 years ago
9

Share Issuances for Cash Finlay. Inc., issued 8.000 shares of $50 par value preferred stock :u $68 per ~hare and 12.000 shares o

f no-par value common stock at $I 0 per share. The common Mock ha~ no Mated value. All issuances were for cash. L02, 4
a. Determine the financial statement effect of the share issuances.
b. Determine the financial statement effect of the issuance of the common stock a-.-.uming that - it had a st:ued value of $5 per share.
c. Determine the financial statement effect of the issuance of the common stock assumin
Business
1 answer:
Basile [38]3 years ago
6 0

Answer:

See the attached excel file for all the the financial statement effect.

Explanation:

Note: This question is not complete and it has some errors. The errors are therefore fixed and the complete question presented before answering the question as follows:

Share Issuances for Cash: Finlay. Inc., issued 8,000 shares of $50 par value preferred stock at $68 per share and 12,000 shares of no-par value common stock at $10 per share. The common stock has no stated value. All issuances were for cash.

a. Determine the financial statement effect of the share issuances (preferred and common).

b. Determine the financial statement effect of the issuance of the common stock assuming that it had a stated value of $5 per share.

c. Determine the financial statement effect of the issuance of the common stock assuming that it had a stated value of $1 per share.

The explanation of the answer is now given as follows:

a. Determine the financial statement effect of the share issuances (preferred and common).

Note: See the attached excel file for the the financial statement effect of the share issuances (preferred and common).

In the attached excel file, the following workings are used:

w.1: Preferred stock = Number of preferred shares issued * Preferred share par value = 8,000 * $50 = $400,000

w.2: Paid-In Capital in Excess of Par - Preferred stock = (Number of preferred shares issued * (Preferred share price per share - Preferred share par value) = 8,000 * ($68 - $50) = $144,000

w.3: Common stock = Number of common shares issued * Common stock share price per share = 12,000 * $10 = $120,000

b. Determine the financial statement effect of the issuance of the common stock assuming that it had a stated value of $5 per share.

Note: See the attached excel file for the financial statement effect of the issuance of the common stock .

In the attached excel file, the following workings are used:

w.4: Common stock = Number of common shares issued * Common share par value = 12,000 * $5 = $60,000

w.5: Paid-In Capital in Excess of Par - Common stock = (Number of common shares issued * (Common share price per share - Common share par value) = 12,000 * ($10 - $5) = $60,000

c. Determine the financial statement effect of the issuance of the common stock assuming that it had a stated value of $1 per share.

Note: See the attached excel file for the financial statement effect of the issuance of the common stock .

In the attached excel file, the following workings are used:

w.6: Common stock = Number of common shares issued * Common share par value = 12,000 * $1 = $12,000

w.9: Paid-In Capital in Excess of Par - Common stock = (Number of common shares issued * (Common share price per share - Common share par value) = 12,000 * ($10 - $1) = $108,000

Download xlsx
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A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. Thi
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Answer:

a. 9%

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c. Yes, Industry will see entry or exits

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Explanation:

a. Percentage rate of return = Earning ÷ Investment by founders × 100

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Answer:

False

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PB13.
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Answer:

                       Submarine Company

Income statement under absorption costing

                                                                        $                 $

Sales (1,800 units x $150)                                              270,000

Less: Full cost:

Direct material (2,000 units x $40)             80,000                                                                                                                                                                                                                                              

Direct labour (2,000 units x $50)                100,000

Variable overhead (2,000 units x $10)        20,000

Fixed overhead (2,000 units x $20)            <u>40,000</u>

                                                                       240,000

Less: Closing stock (200 units x $120)        <u>24,000  </u>      <u>216,000</u>

Gross profit                                                                         54,000

Less: Selling and administrative expenses:

Variable selling and administrative                                    36,000

Fixed selling and administrative expenses  <u>15,000</u>          <u>51,000</u>

Net profit                                                                                3<u>,000</u><u>  </u>  

                             Submarine Company      

Income statement using marginal costing

                                                                         $                  $                

Sales (1,800 units x $150)                                              270,000

Less: Variable costs:

Direct material (2,000 units x $40)             80,000                                                                                                                                                                                                                                              

Direct labour (2,000 units x $50)                100,000

Variable overhead (2,000 units x $10)        <u>20,000</u>

                                                                       200,000

Less: Closing stock (200 units x $100)        <u>20,000</u>        

                                                                       180,000

Add: Variable selling and administrative     <u>36,000</u>       <u>216,000</u>

Contribution                                                                       54,000

Less: Fixed cost:

Fixed production cost                                    40,000

Fixed selling and administrative expenses  <u>15,000</u>          <u>55,000</u>

Net loss                                                                               <u> (1,000)   </u>    

                                 Profit reconciliation statement

                                        Closing stock         Net profit/loss

                                                 $                           $

Absorption costing               24,000                 3,000

Less: Marginal costing          <u>20,000</u>                 <u>(1,000)</u>

Difference                             <u>4,000   </u>                  <u> 4,000</u>

The difference of $4,000 in net profit is as a result of $4,000 difference in closing inventory.

                                     

Explanation:

In marginal costing, variable costs are deducted from sales in order to obtain the contribution margin. Net profit is calculated by deducting fixed costs from the contribution margin. Closing stock is valued at marginal cost per unit in marginal costing. Closing stock is the difference between production units and sales units. Marginal cost is the sum total of all variable costs.

In absorption costing, full costs are deducted from sales in order to obtain the gross profit. Net profit is the difference between gross profit and selling and administrative expenses. Closing stock is valued at full cost in absorption costing. Full cost is the aggregate of variable costs per unit and fixed costs per unit.

3 0
3 years ago
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Answer:

C) within an industry

Explanation:

Cost leadership is being competitive by having lowest cost op operation in the whole industry. This makes the company to offer cheap product to the customers and have an competitive edge in the market. Many big corporation  adopt cost leadership in their strategic marketing campaigns. So, the correct answer is C) within an industry.

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