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1)Randal Inc
1)Randal Inc. has authorized capital to issue 3.000 new common stocks at $5 par value. Ms. Marianne Randal pays $10,000 in exchange for 1500 common stocks. Which of the following accounting is correct?
Cash debit $10,000 and Capital Stock credit $10,000
Cash debit $10,000 and Unpaid Capital credit $10,000
Cash debit $10,000 and Capital Stock credit $7,500; Additional Paid in Capital credit $2,500
Cash debit $10,000 and Capital Stock credit $2,500 and Additional Paid in Capital $7,500
2)
Marvel Corp. buys an automobile at $18,000 list price and $2,000 customs duty. Marvel estimates to use it in next five years, after five years the vehicle's value estimated as $4,000. According to straight line method the vehicle's depreciation expense per year will be: *
$3,600
$5,000
$3,200
$4,000
3)Name THREE transactions that improves cash flow but does not increase profit.
4)
Gogol Inc. buys a jet for $5,000.000 borrowing a loan from Chase Manhattan Bank. Which of the following is correct journal entry for Gogol? *
Notes Payable debit $5M and Vehicles credit $5M.
Vehicles debit $5M and Notes Payable credit $5M.
Equipments debit $5M and Notes Payable credit $5M.
Vehicles debit $5M and Accounts Payable credit $5M.
5)
Thinkerbell Corp. reports the following information related to its most recent year(2020). The company has sales of $100 millions and the cost of goods sold and other expenses totaled $65 millions. Corporate income tax rate is 25% and legal reserves should be calculated as 5%. What's the net income of the year for Thinkerbell? *
$25,000,000
$24,937,500
$1,312,500
$26,250,000
6)
At the beginning of 2015 company buys a truck at $150,000 with estimated useful life is five years. However company sells it at $80,000 at the beginning of 2017 due to urgent cash need. Assume that company uses straight line method. what is the gain or loss from the sale of the truck? *
$20,000 gain
$70,000 loss
$10,000 gain
$10,000 loss
Expert Solution
1)Ms. Marianne Randal pays 10,000 in exchange for 1,500 common stock.
The general rule is Debit what comes in and credit what goes out
Therefore debit cash 10,000
and 1,500 common stock is exchanged for this 10,000 cash.
The value of stock is $5.
That means for 1500 common stock = 1,500*5 = 7,500
Therefore, credit common stock or capital stock with 7500 and the excess amount that is 10,000 - 7500 = 2,500.
it should be credited to additional paid in capital.
The answer is:
Cash debit $10,000 and Capital stock credit $7500; Additional paid in capital $2,500.
2)
According to straight line method depreciation per the year is
= Cost of asset - scrap value ÷ no.of.years
cost of asset = $ 18,000
Scrap value = nil
No.of.years = 5
Depreciation per year = $ 18,000 - 0 ÷ 5
= $ 3,600
3)
1. Issue of common stock for cash.
2. Borrowings from bank.
3. Bonds issued for cash.
(D)
4)Answer :- Vehicles debit $5M and Notes Payable credit $5M.
Gogol Inc. will record purchase of jet as Vehicles and will debit Vehicle by $5M.
5)Net income = Sales - cost of goods sold -Expense on sales - taxes
= $100000000 - 65000000
= $ 35000000 -25%
= $ 26250000
The answer is $ 26250000.\
6)
Answer : $10,000 loss
Cost of Purchase in 2015 : $150,000
Useful life : 5 years
Depreciation Rate: 1/5 * 100 = 20%
Depreciation(for two years) at the end of 2016: $60,000
Depreciated Value in the beginning of 2017 : $150,000 - $60,000 = $90,000
Sales Price : $80,000
Therefore loss : $90,000 - $80,000 = $10,000
(D)
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