Use the Following to Answer Questions

question 102

Multiple Choice

Use the following to answer questions
Jing Company was started on January 1,2016 when it issued common stock for $50,000 cash.Also,on January 1,2016 the company purchased office equipment that cost $34,000 cash.The equipment was delivered under terms FOB shipping point,and transportation cost was $2,000.The equipment had a five-year useful life and a $12,000 expected salvage value.
-Assume that Jing Company earned $30,000 cash revenue and incurred $19,000 in cash expenses in 2018.Using straight-line depreciation and assuming that the office equipment was sold on December 31,2018 for $16,000,the amount of net income or (loss) appearing on the December 31,2018 income statement would be:

• A)($6,600).
• B)$6,600.
• C)$600.
• D)$5,400.

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Definitions:

Long-Term Debt

Financial obligations of a company that are due more than one year in the future.

Incremental Value

The additional value that is gained from making an investment or conducting a project, compared to doing nothing.

Net Present Value

A financial analysis method used to evaluate the profitability of an investment or project, assessing the value of all future cash flows, both incoming and outgoing.

All-Equity Firms

Companies that are financed entirely through equity without any debt.