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The equity of the corpor be $200,000. John forg rnoration

The equity of the corpor be $200,000. John forg rnoration

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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John is president of a small corporation. At the end of the year, his accountant calculates the following costs attributable to the business. Payroll for wages and salaries: $100,000 Interest paid to banks: $40,000 Depreciation on equipment: $80,000 Supplies, utilities: $50,000 The equity of the corporation, a measure of the value of its assets less debt, is estimated to be $200,000. John forgoes a return of 10% per year by keeping the equity in the corporation. The normal profit for the corporation this year is Select one: O a. zero. O b. $24,000. O c. $50,000. O d. $20,000.
Transcribed Image Text:John is president of a small corporation. At the end of the year, his accountant calculates the following costs attributable to the business. Payroll for wages and salaries: $100,000 Interest paid to banks: $40,000 Depreciation on equipment: $80,000 Supplies, utilities: $50,000 The equity of the corporation, a measure of the value of its assets less debt, is estimated to be $200,000. John forgoes a return of 10% per year by keeping the equity in the corporation. The normal profit for the corporation this year is Select one: O a. zero. O b. $24,000. O c. $50,000. O d. $20,000.
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