A corporation issued 2,000 shares of $50 par common for $55 cash per share. Upon
ID: 2485973 • Letter: A
Question
A corporation issued 2,000 shares of $50 par common for $55 cash per share. Upon issuing the stock, the corporation should make the following journal entry:
Debit Common Stock for $100,000; debit Paid-in Capital in Excess of Par for $10,000; credit Cash for $110,000.
Debit Cash for $110,000; credit Common Stock for $100,000; credit Paid-in Capital in Excess of Par for $10,000.
Debit Cash for $110,000; credit Common Stock for $110,000.
Debit Investment for $100,000; debit Paid-in Capital in Excess of Par for $10,000; credit Cash for $110,000.
A chemical company can produce both a commodity-grade and a premium-grade product. Why would the company elect to process the commodity-grade product further to produce the premium-grade product?
The differential revenue exceeds the differential cost to process the product to premium grade.
The differential cost exceeds the differential revenue to process the product to premium grade.
There is no demand in the marketplace for the premium-grade product.
The incremental cost of production exceeds the incremental revenue.
Which of the following is not true about managerial accounting reports?
They provide objective measures of past operations and subjective estimates that affect future decisions.
They must report on the company as a whole.
They may be provided at any time management needs information.
They may be prepared to report information for any unit of the business to support decision making.
Debit Common Stock for $100,000; debit Paid-in Capital in Excess of Par for $10,000; credit Cash for $110,000.
Debit Cash for $110,000; credit Common Stock for $100,000; credit Paid-in Capital in Excess of Par for $10,000.
Debit Cash for $110,000; credit Common Stock for $110,000.
Debit Investment for $100,000; debit Paid-in Capital in Excess of Par for $10,000; credit Cash for $110,000.
A chemical company can produce both a commodity-grade and a premium-grade product. Why would the company elect to process the commodity-grade product further to produce the premium-grade product?
The differential revenue exceeds the differential cost to process the product to premium grade.
The differential cost exceeds the differential revenue to process the product to premium grade.
There is no demand in the marketplace for the premium-grade product.
The incremental cost of production exceeds the incremental revenue.
Which of the following is not true about managerial accounting reports?
They provide objective measures of past operations and subjective estimates that affect future decisions.
They must report on the company as a whole.
They may be provided at any time management needs information.
They may be prepared to report information for any unit of the business to support decision making.
Explanation / Answer
A corporation issued 2,000 shares of $50 par common for $55 cash per share.
Answer
Debit Cash for $110,000; (2,000*$55)
credit Common Stock for $100,000;(2,000*$50)
credit Paid-in Capital in Excess of Par for $10,000.
A chemical company has a commodity-grade and premium-grade product. Why might the company elect to process the commodity-grade product further to the premium grade product?
The differential cost exceeds the differential revenue to process the product to premium grade
Ans. The chemical company would use Differential analysis to decide if it has to process the commodity-grade product further to the premium grade product. When a product is discontinued, the company will lose certain revenue and also avoid certain cost. If the loss in revenue is more than the cost that is saved, then the company should not avoid the product. Therefore, in this case, the cost of production will not be reduced and so only revenue will be lost which might cause the company to process the commodity-grade product further to the premium grade product.
The incremental cost of production exceeds the incremental revenue.
Which of the following is not true about managerial accounting reports?
They must report on the company as a whole.
Ans. The company should consider the below issues before considering if it has to accept the business or not. First, the sales price for the items need to be obtained and then the incremental costs like direct materials, labor and other variable overhead needs to be considered
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