Common stock : Common stock is the cash raised by the company by issuing common or ordinary shares to the stockholders. This is an investment for the shareholders for which they receive the dividends from the issuing company, and have voting rights. Preferred stock : Preferred stock is the cash raised by the company by issuing preferred shares. This investment fetches a preferential right for dividend for the preferred stockholders over the common stockholders. Par value : The corporation charter assigns and allocates the dollar value for its share which is referred to as par value. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To journalize : The transactions occurred on January 22, and February 27

Question

Sweet Solutions reports net income of $375,000, sales of $6,250,000, and average assets of $850,000. What is the profit margin?

Answer 1

Question

Chapter 12, Problem 12.3EX

(a)

To determine

Common stock: Common stock is the cash raised by the company by issuing common or ordinary shares to the stockholders. This is an investment for the shareholders for which they receive the dividends from the issuing company, and have voting rights.

Preferred stock: Preferred stock is the cash raised by the company by issuing preferred shares. This investment fetches a preferential right for dividend for the preferred stockholders over the common stockholders.

Par value: The corporation charter assigns and allocates the dollar value for its share which is referred to as par value.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The transactions occurred on January 22, and February 27

(b)

To determine

Paid-in capital: This is the total of stock capital contributed by investors, and so, sometimes referred to as contributed capital. It includes preferred stock capital issued, common stock capital issued, and capital issued by the way of sale of treasury stock.

To determine: The total paid in capital as of February 27

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