Short Answer (S points each) 1. Myers performed legal services to assist Penn Co

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Short Answer (S points each) 1. Myers performed legal services to assist Penn Co. for services provided during its initial organization. Myers accepted 750 shares of $5 par common stock in Balm as payment for her services. Myers provided 65 hours of legal services in return for the stock. The Penn shares were initially sold at $12 per share, and had a market value of 514 per share upon transfer to Myers. What is the journal entry that Penn should record for this transaction? For its first year of operations, Cable Corp. recorded a $100,000 expense in its tax return that will not be recorded in its accounting records until next year. There were no other differences between its taxable and financial statement income. Cable's effective tax rate for the current year is 45%, but a 40% rate has already been passed into law for next year. In its year-end balance sheet, what amount should Cable report as a deferred tax asset (liability)? 2. 3. What are the two types of pension plans, and why do firms prefer one over the other? How are shares valued when issued in non-cash transactions, when the shares have no ready market value? 4.

Explanation / Answer

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Legal & Professional Service Dr 10500 14*750 Share Capital (Common Stock) Cr 3750 5*750 Share Premium AC Cr 6750 9*750 (Being Shares issued for the Legal & Professional Services) As the FMV of Shares is given clearly in the question, the same will be considered as the Value of Legal Services. As the Par Value of Share is $5, Amount equivalent to $5 per share will got to Common Stock and rest will go to Share Premium Account)

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