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Question
Immediately before Cayman Corporation issued 2,000 shares of its common stock for $15 a share, it had total liabilities of $150,000 and total shareholders' equity of $300,000. Cayman had 10,000 shares of common stock outstanding prior to the new issuance. Calculate Caymans debt/equity ratio immediately after the new issuance.
Answer
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Related questions
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A machine was purchased on January 1 for $100,000. The machine has an estimated useful life of 5 years with a salvage value of $20,000. Under the straight-line method, the book value and the accumulated depreciation of the machine at the end of year two is respectively,
a. $60,000 and $40,000
b. $68,000 and $32,000
c. $40,000 and $60,000
d. $48,000 and $32,000
Q:
A machine was purchased on January 1 for $50,000. The machine has an estimated useful life of 10 years with a salvage value of $2,000. Under the double-declining-balance, depreciation expense for each of the first two years is, respectively,
a. $12,000 and $12,000.
b. $10,000 and $8,000.
c. $12,000 and $9,500.
d. $12,500 and $12,500.
Solution: $50,000 x 2/10 and ($50,000 - $10,000) x 2/10
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a. increases total assets.
b. decreases total assets.
c. decreases the current ratio.
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b. is a long-term liability.
c. is equal to total depreciation expense recorded and decreases total plant and equipment.
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Which one of the following should be classified as land on the balance sheet?
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b. Mineral rights representing gold in the soil
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d. Sidewalks and driveways which lead to the companys office building
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A significant difference in depreciation accounting between US GAAP and IFRS accounting is that in IFRS:
a. Management has the option of periodically revaluing property, plant and equipment to market value
b. Management is mandated to revaluing property, plant and equipment to market value
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2. Bradley Corporation began business on January 1. During January, Bradley reported the following: January 1 purchase: 100 units @ $10 = $1,000 January 10 purchase: 150 units @ $14 = $2,100 January sales: 200 units Determine the amount of inventory to report on Bradleys balance sheet at January 31 under the FIFO cost flow assumption.
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2. Before adjusting entries, Dormont Corps accounts receivable and allowance for doubtful accounts are $800,000 and $7,000 (credit balance), respectively. Using an aging schedule of accounts receivable, it is determined that $44,000 of the accounts receivable would probably be uncollectible. Calculate the net realizable value of Dormonts receivables at year end.
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A sequence of events affecting the shareholders' equity section of Malabar Corporation follows:
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B. On May 16, a 3-for-1 stock split was distributed.
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For each entry, state how the event changed assets, liabilities, and shareholders' equity.
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The shareholders' equity section of Maven Corporation's balance sheet as of December 31, 2014 is as follows: Common stock, $1 par; authorized, 6,000 shares; 2,000 shares issued
$ 2,000 Additional paid-in capital
60,000 Retained earnings
58,000 Total shareholders equity
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Canton Corporation shareholders' equity section of its balance sheet as of December 31, 2014 is as follows: Common stock, $5 par value; 40,000 shares authorized
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+ A and + SE (Contributed Capital) c.
+ A and + SE (Retained Earnings) d.
+ A and A e.
+ A and + L f.
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On January 1, 2014, Enron Corporation issued a 4-year, 7%, $9,000 bond payable. Beginning in 2015, interest is payable annually every January 1. The market rate of interest at issuance is 9%. How much are the interest payments by Enron? Why is the amount of interest expense different than the cash payments?
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On January 1, 2014, Mango Corporation issued a 3-year, 4%, $3,000 bond payable. Beginning in 2015, interest is payable every year on January 1 over the life of the bond. The market rate of interest on January 1, 2014 is 6%. What are the proceeds received by Mercer from the issue of this bond on January 1, 2014?