Nebraska Inc. Issued 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit Common Stock for
a. $30,000
b. $3,000
c. $15,000
d. $45,000
Nebraska Inc. Issued 3,000 shares of common stock for $45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit Common Stock for
a. $30,000
b. $3,000
c. $15,000
d. $45,000
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Depreciation by Three Methods; Partial Years
Razar Sharp Company purchased equipment on July 1, 2014, for $58,320. The equipment was expected to have a useful life of three years, or 7,560 operating hours, and a residual value of $1,620. The equipment was used for 1,400 hours during 2014, 2,600 hours in 2015, 2,300 hours in 2016, and 1,260 hours in 2017.
Required:
Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, 2016, and 2017, by (a) the straight-line method, (b) units-of-output method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.
Year | Amount |
2014 | $ |
2015 | $ |
2016 | $ |
2017 | $ |
Year | Amount |
2014 | $ |
2015 | $ |
2016 | $ |
2017 | $ |
Year | Amount |
2014 | $ |
2015 | $ |
2016 | $ |
2017 | $ |
Nadal Athletic uses a periodic inventory system and has the following transaction related to its inventory for the month of August 2018: Date Transactions Units Cost per Unit Total Cost August 1 Beginning inventory 7 $130 $910 August 4 Sale ($150 each) 5 August 11 Purchase 9 120 1,080 August 13 Sale ($160 each) 7 August 20 Purchase 12 110 1,320 August 26 Sale ($170 each) 10 August 29 Purchase 12 100 1,200 $4,510 Required:
1. Using FIFO, calculate ending inventory and cost of goods sold at August 31, 2018. (3 point)
2. Using LIFO, calculate ending inventory and cost of goods sold at August 31, 2018. (3 point)
3. Using weighted-average cost, calculate ending inventory and cost of goods sold at August 31, 2018. (3 point)
4. Calculate sales revenue and gross profit under each of the three methods.(6 point) FIFO: LIFO: weighted-average cost:
5. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory? Explain. (2 point)
6. If Pete’s chooses to report inventory using LIFO, record the LIFO adjustment. (3 point)
Gore Company, organized on January 2, 2016, had pretax accounting income of $6,100,000 and taxable income of $8,560,000 for the year ended December 31, 2016. The 2016 tax rate was 40%. The only difference between book and taxable income is estimated warranty costs. Expected payments and scheduled enacted tax rates are as follows: |
2017 | $820,000 | 35% |
2018 | 410,000 | 35% |
2019 | 410,000 | 35% |
2020 | 820,000 | 30% |
Required: |
Prepare one compound journal entry to record Gore’s provision for taxes for the year 2016 |
A firm is considering two mutually exclusive investment alternatives, both of which cost $5,000. The firm’s hurdle rate is 12%. The after-tax cash flows associated with each investment are:
Year Investment A Investment B
1 $2,000 $1,000
2 1,500 1,500
3 1,500 2,000
4 1,000 3,000
For each alternative, calculate the payback period, the net present value, and the profitability index. Which alternative (if any) should be selected?
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