Answer:
Total Stockholders’ Equity is in error by: $25.
Explanation:
It is important to remember that Stockholders’ Equity consist of Retained Profit and Common Stock and effect on the errors on these elements ultimately affects Stockholders’ Equity.
The correct entry for expiration of prepaid insurance
Insurance Expense $12 (debit)
Prepaid Insurance $12 (credit)
Effect on net profit of the error : overstatement of profit by $12
Effect on common stock of the error : none
The correct entry for Issuance of bonds :
Investments in Bonds $12 (debit)
Cash $12 (credit)
Effect on net profit of the error : none
Effect on common stock of the error : overstatement by $13
Conclusion :
Total Effect on Stockholders’ Equity = Overstatement of $25.
Multinational enterprises (MNEs) have an impact far beyond their firm boundaries. Assume you are working for a small firm that supplies a product or service to an MNE. How might your relationship change as the MNE moves from Globalization 2.0 to Globalization 3.0 operations?
Answer:
Multinational enterprises (MNEs)
Relationship Change as the MNE moves from Globalization 2.0 to Globalization 3.0 operations:
This move means that Indian and Chinese companies would be competing with my local small firm. The MNE may be looking for cheaper prices for my company's products and services, which the Indian and Chinese companies would more efficiently supply it. My firm may be on the precipice of liquidating if this MNE is our major customer. My firm must move fast to become more competitive by differentiating our products and services with better quality and perhaps reduced production costs, to enable it compete more favorably with the Indian and Chinese competitors. Otherwise, we may regard the relationship as nearing its end and prepare for other opportunities with other companies.
Explanation:
Globalization reduces national boundaries by integrating national economies into a globalized economy, thus enabling companies to compete globally for financial resources, goods, and services. When Globalization 1.0 happened, countries were globalized and the world became a global village. When Globalization 2.0 from which the G7 profited largely, companies were globalized. With the current Globalization 3.0, individuals are being globalized, and the highest beneficiaries are Indian and Chinese nationals who appear better prepared to take on the world, garner most of the important resources to themselves, and call the shots from the boardrooms. An example is Microsoft's current CEO, Satya Nadella, who is an Indian-American.
Sharon transfers to Russ a life insurance policy with a cash surrender value of $30,000 and a face value of $100,000 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $14,000 in premiums, and he collects the $100,000 face value. How much of the proceeds, if any, are taxable to Russ?
Answer: $56,000
Explanation:
When a life insurance policy is transferred the taxable amount at death is the value of proceeds that the policy gives less the Cash surrender value and the premiums that have already been paid by the formula;
Taxable Proceeds = Total Proceeds received - (Cash Surrender Value + Premiums paid)
Taxable Proceeds = 100,000 - (30,000 + 14,000)
Taxable Proceeds = $56,000
A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 14.2%, what is the stock price
Answer:
$11.98
Explanation:
A share of common stock just made a dividend payment of $1.00
The expected long-run growth rate of for this stock is 5.4%
= 5.4/100
= 0.054
The investors required rate of return is 14.2%
= 14.2/100
= 0.142
The first step is to calculate the dividend year 1(D1)
D1= Do(1+g)
= 1(1+0.054)
= 1×1.054
= $1.054
Therefore, the stock price can be calculated as follows
Po= D1/(rs-g)
= 1.054/(0.142-0.054)
= 1.054/0.088
= $11.98
Hence the Stock price is $11.98
When a buyer or seller of an agricultural commodity takes action to protect against a future change in the value of the commodity, then the buyer or seller is
Answer: b. Hedging
Explanation:
Hedging is a method of reducing the risk of expected losses in future by using derivative instruments to invest in an opposing strategy to the one you currently have. That way, if losses occur on the one side of the strategy, the other side would still bring you profits.
Granted, this will reduce your profits due to the extra investment but the rationale behind it is to either get some profit or no profit at all. '
A buyer or seller of an agricultural commodity can engage in a forward contract that guarantees that the other party buys the commodity in question for a particular price on a particular date. That way they would not have to worry about a price change.
Imagine you have the sole marketing rights to a new herbal shampoo that stops hair loss and actually causes new hair growth. You plan to sell your product on an Internet website, which you will advertise on late night television. You are also hoping to obtain free publicity to place stories in men's fashion magazines. You are planning to sell online a 15-ounce bottle for $24.99 plus $7.99 shipping and handling. Using the information provided, identify each element of your marketing mix.
Answer with Explanation:
There are basically four elements of marketing mix and are given as under:
Product: Herbal shampoo is my product which possesses features of stopping hair losses and increasing hair growth.
Price: The price per bottle is $24.99 and the shipment cost is $7.99 per bottle. The size of the bottle is 15 ounces.
Place: Across the globe through Internet website
Promotion: Late night television advertisement and free publicity in men's fashion magazines will help in growing the business.
A and B are substitute goods and are priced the same. A complementary good of A increases in price while the price of the same complentary good for B remains the same. According to the law of demand, with everything else being equal, what will happen to the demand of A
Answer:
The demand for A will decrease
Explanation:
If A and B are substitute goods it means either A and B can be used in the place of the other as they satisfy same needs. Two goods are said to be complementary goods if the use of 1 of the goods requires the use of the other. For example if good A was a car, it's complementary good will be petrol.
Since A and B can be substituted for each other, if the price of a Complementary good for A increases, the demand for A will decrease because the law of demand says that higher prices causes decrease in demand. People will rather buy good B whose complement remains the same in price since it is cheaper.
I hope you find my answer useful.
Which of the followings is a good source for gathering competitive information about senior managers' responsibilities, their background, their education, and highlights of their achievements to date? Group of answer choices government market research firms company websites business and trade publications
Answer:
business and trade publications
Explanation:
A trade publication is a type of publications that specifically share information between and about personnels or individuals, often experts, within a particular industry for the purpose of improving their business or field and to actively keep current or updated on market trends.
Hence, BUSINESS AND TRADE PUBLICATIONS is a good source for gathering competitive information about senior managers' responsibilities, their background, their education, and highlights of their achievements to date.
The company websites is a good source for gathering of competitive information about senior managers' responsibilities, background, education,and highlights of their achievements to date
T ypically, a flourishing organization will publish the full information of their teams on its official website for different official reasons.
The Information does features the managers and other staffs personal details like phone numbers, background, education, achievement, experiences etc.
Hence, those information can be gathered and used by competitors.
In conclusion, the company websites is a good source for gathering of competitive information about senior managers
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Journalize the following transactions (assume a 360-day year when calculating interest):
Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account.
May 30 The note of March 1 was dishonored.
Answer:
Mar. 1 Received a 90-day, 10% note for $24,000, dated March 1, from Batson Co. on account.
Dr Notes receivable 24,000
Cr Accounts receivable 24,000
May 30 The note of March 1 was dishonored.
Dr Accounts receivable 24,600
Cr Notes receivable 24,000
Cr Interest revenue 600
If the note would have been collected (paid by Batson Co.), the journal entry would have been:
May 30, note collected from Batson Co.
Dr Cash 24,600
Cr Notes receivable 24,000
Cr Interest revenue 600
Bolster Soda had an accounts receivable turnover ratio of 9.9 this year and 11.0 last year. Castor Soda had a turnover ratio of 9.3 this year and 9.3 last year. This implies:
Answer:
This implies Bolster Soda collects receivables more effectively and quickly than Castor Soda in the two years.
Explanation:
The accounts receivable turnover ratio refers to an accounting ratio that is used to show the how effective a firm is in collecting the receivables or money its clients are owing it.
This implies that accounts receivable turnover ratio is used to determine the extent to which a firm ie effectively managing the credit it gives to customers and how quickly the firm collects that that short-term debt.
The formula for calculating the accounts receivable turnover ratio is as follows:
Accounts receivable turnover ratio = Net credit sales / Average accounts receivable
When the accounts receivable turnover ratio is high, it implies that the company is efficient is collecting debt and a high percentage of its cutomers are paying up their debts.
The account receivable turnover ratios in the question therefore imply Bolster Soda collects receivables more effectively and quickly than Castor Soda in the two years.
You purchase a bond with an invoice price of $1,410. The bond has a coupon rate of 6.8 percent, and there are 3 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000.
Answer:
clean price = $1,393
Explanation:
The clean price of the bond does not include any accrued interests. The invoice price = clean price + accrued interests
invoice price = $1,410accrued interests = $1,000 x 0.068 x 3/12 = $17clean price = invoice price - accrued interests = $1,410 - $17 = $1,393
James just received an $8,000 inheritance check from the estate of his deceased rich uncle. James wants to set aside enough money to pay for a trip in five years. If the trip is expected to cost $5,000, how much of the $8,000 must James deposit now if the rate of return is 12% per year in order to have the $5,000 in five years
Answer:
$2831.13
Explanation:
The computation of the present value of 5,000 in five years is shown below:-
Present Value of 5,000 in five years = Expected cost ÷ (1 + Rate of return)^Number of years
= $5,000 ÷ (1 + 12%)^5
= $
5,000 ÷ (1.12)^5
= $2831.13
Therefore for computing the present value of 5,000 in five years we simply applied the above formula.
The following summarizes the aging of accounts receivable for Johnston Supplies, Inc. as of July 31, 2016:
Number of Days Unpaid Total Accounts Receivable Historical % Uncollectible
Not yet due $128,200 3%
1-30 days past due $90,900 13%
31-60 days past due $55,300 19%
Over 60 days past due $33,500 37%
Required:
a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Inc. is a credit balance in the amount of $29,457 on July 31, 2016. Prepare the required adjusting entry to record Bad Debt Expense for the year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
b. Johnston Supplies, Inc. writes off $3,251 of uncollectible accounts on August 15, 2016. Prepare the required adjusting entry to record the write-off. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.
c. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15
Answer:
a. June 30, 2016 adjusting entry for bad debt expense
Dr Bad debt expense 9,108
Cr Allowance for doubtful accounts 9,108
b. August 15, 2016, uncollectible accounts are written off
Dr Allowance for doubtful accounts 3,251
Cr Accounts receivable 3,251
c. Allowance for doubtful accounts
debit credit
June 30, 2016 $38,565
August 15, 2016 $3,251
August 15, 2016 $35,314
Explanation:
Number of Days Total Accounts Historical % Total
Unpaid Receivable Uncollectible
Not yet due $128,200 3% $3,846
1-30 days past due $90,900 13% $11,817
31-60 days past due $55,300 19% $10,507
Over 60 days past due $33,500 37% $12,395
Total $38,565
The cost structure of two firms competing in the same industry is represented by the following cost formulas: Company X = $2,276,000 + $50/ unit; Company Z = $1,052,000 + $98/unit. The selling price is $145 per unit for both companies. Required: 1. Calculate the indifference point between the two cost structures, that is, the amount of unit sales that produce exactly the same operating income for Company X and Company Z.
Answer:
Indifference point= 25,500
Explanation:
Giving the following information:
Company X = $2,276,000 + $50/ unit
Company Z = $1,052,000 + $98/unit
We need to find the indifference point where the two companies provide the same total cost.
We need to equal both cost equations:
2,276,000 + 50x = 1,052,000 + 98x
1,224,000 = 48x
25,500= x
x= number of units
To prove:
Company X = $2,276,000 + $50*25,500= $3,551,000
Company Z = $1,052,000 + $98*25,500= $3,551,000
For what types of information would you use the Quick Analysis tool? Why would you choose to use the Quick Analysis tool and what other options would there be to calculate your data besides using this method? Is one method better than the other, or does it depend on what you are working with? Explain.
Answer:
The Quick Analysis Tool (QAT) is a tool found in Microsoft Excel Spreadsheet. It is very useful when dealing with an array of data with multiple cell qualities.The QAT gives one the ability to instantly produce various types of charts, including line and column charts, or add mini graphical representation of the data. Other alternative methods of achieving the above would be to go through the Data Tab on the Excel Ribbon and select the specific actions which one would like to effect.No method is better than the other. It all depends on the nature of work one is working on as well as one's dexterity or proficiency. With a simple array of data, one might find the QAT, which comes suggested as soon as the table with the data is highlighted, easy to use.Cheers!
Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario?
Answer: b. A Strategic Alliance
Explanation:
A Strategic Alliance refers to two or more entities agreeing to work together and involves them sharing their resources, knowledge, and capabilities to develop a superior product or other objectives that might not be tangible.
The Companies will remain independent while this is done.
The relationship between Vibgyor and the software company can therefore best be referred to as a Strategic Alliance.
The demand curve is Qd = 1,600 – 50P and the supply curve is Qs = 1,200 + 150P. Calculate the equilibrium quantity. Group of answer choices
Answer:
Equilibrium quantity is 1500
Explanation:
The equilibrium quantity is achieved at a point where the quantity demanded equals quantity supplied.
Qd=Qs
Qd=1,600 – 50P
Qs== 1,200 + 150P
1,600 – 50P=1,200 + 150P
We need to collect like terms
1600-1200=150P+50P
400=200P
P=400/200
P=2
We need substitute 2 for P in any of Qd or Qs
Qs=1200+(150*2)=1500
Suppose that the government imposes a $2 a cup tax on coffee. The rise in the price of a Starbucks coffee will be ______, coffee. The number of cups of coffee bought in coffee shops will _______.
Answer:
increase, decrease
Explanation:
In simple words, when the tax was imposed on the product the company will ultimately bear it to the final consumer which means the price will rise. However when the price of the product rises the demand for that product decreases due to the fact that many individuals would not be able to buy it now from their limited income, this phenomenon is called price elasticity due to income.
Answer:
increasedecreaseExplanation:
To create the proper style for an argumentative essay, a writer should
add personal statements.
O include vague language.
O incorporate slang words.
O provide clear statements.
Answer:
Provide clear statements
The government can pay for projects to create work
Explanation:
To create the proper style for an argumentative essay, a writer should
provide clear statements.
What is argumentative essay?An argumentative essay can be defined as a writing essay in which the writer is meant include evidence as well as detailed fact that will help to backup the argument.
When writing an argumentative essay it is important that the writer provide clear statement to as well focus on the evidence.
Therefore to create the proper style for an argumentative essay, a writer should provide clear statements.
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Maben Company was started on January 1, 2018, and experienced the following events during its first year of operation:
1. Acquired $30,000 cash from the issue of common stock.
2. Borrowed $40,000 cash from National Bank.
3. Earned cash revenues of $48,000 for performing services.
4. Paid cash expenses of $25,000.
5. Paid a $1,000 cash dividend to the stockholders.
6. Acquired an additional $20,000 cash from the issue of common stock.
7. Paid $10,000 cash to reduce the principal balance of the bank note.
8. Paid $53,000 cash to purchase land.
9. Determined that the market value of the land is $75,000.
a. Record the preceding transactions in the horizontal statements model. Also, in the Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is shown as an example.
Answer:
sine there is not enough space available, I used an excel spreadsheet.
Explanation:
The last event (9) does not need to be recorded since fixed assets must be reported using their historical value, not their fair market value.
Loaded-Up Fund charges a 12b-1 fee of 1.0% and maintains an expense ratio of 0.75%. Economy Fund charges a front-end load of 2% but has no 12b-1 fee and an expense ratio of 0.25%. Assume the rate of return on both funds’ portfolios (before any fees) is 6% per year. How much will an investment of $1,000 in each fund grow to after:
How much will an investment in each fund grow to after: (LO 4-5)
a. 1 year?
b. 3 years?
c. 10 years?
Answer:
A. Year 1 = $1036.35
B. Year 3 = $1158.96
C. Year 10 = $1714.08
Explanation:
Given an investment of $1000. The end value of the investment will be equal
to I × (1 - front-end load) × (1 + r - true expense ratio)T
Loaded-Up:
Then add the 12b-1 fee to the operating expenses to obtain the true expense ratio: Expense ratio + (12b-1 fee) = 1% + 0.75% = 1.75%
a. Year 1 = $1000 (1 + 0.06 - 0.0175) = $104.25
b. Year 3 = $1000 (1 + 0.06 - 0.0175)^3 = $113.30
c. Year 10 = $1000 (1 + 0.06 - 0.0175)^10 = $151.62
Economy fund:
a. Year 1 = $1000 * 0.98 (1 + 0.06 - 0.0025) = $1036.35
b. Year 3 = $1000 * 0.98 (1 + 0.06 - 0.0025)^3 = $1158.96
c. Year 10 = $1000 * 0.98 (1 + 0.06 - 0.0025)^10 = $1714.08
Suppose you are committed to owning a $230,000 Ferrari. If you believe your mutual fund can achieve an annual return of 10.95 percent, and you want to buy the car in 12 years on the day you turn 30, how much must you invest today
Answer:
$66,101.45
Explanation:
To find the amount of money that you must invest today, you have to use the formula to calculate the present value:
PV=FV/(1+i)^n
PV= present value
FV= future value= 230,000
i= interest rate= 10.95%
n= number of periods of time= 12
PV=230,000/(1+0.1095)^12
PV=230,000/(1.1095)^12
PV=230,000/3.4795
PV=66,101.45
According to this, the answer is that you must invest today $66,101.45.
Answer:
The amount to be invested today, present value = $66,099.80 Explanation:
The amount to be invested today is the present of an investment of 12 years which would produce a future value of $230,000 where interest rate is 10.95%.
The formula below would be of help;
PV = FV× (1+r)^(-n)
PV - Present Value, FV- Future value, n- number of years
PV = ?, FV- 230,000 , r- 10.95%, n- 12
PV = 230,000 × (1.1095)^(-12)
PV = 66,099.80
The amount to be invested today, present value = $66,099.80
Ruth Hu recently inherited $200,000. She has invested the inherited money in real estate and government securities. Hu is using her money as a:
Answer:
Store of value.
Explanation:
Ruth Hu recently inherited $200,000. She has invested the inherited money in real estate and government securities. Hu is using her money as a store of value.
A store of value can be defined as the characteristic of an asset which makes it tradable, can be saved, maintain its value, retrievable and exchanged at a future time without it depreciating.
Assets with such functions or characteristics are money, gold, diamonds and other precious stones.
Answer:
Store of value.
Explanation:
I read the story.
hen a monopolist is able to sell its product at different prices, it is engaging in a. distribution pricing. b. quality-adjusted pricing. c. arbitrage. d. price discrimination.
Answer:
Price discrimination
Explanation:
Price discrimination is charging customers differently for the same product.
Price discrimination is a type of selling strategy where customers are charged for same goods and services. The seller charges based on what they think that the user is likely to pay.
Gladstone Company issues 200,000 shares of preferred stock for $40 a share. The stock has fixed annual dividend rate of 5% and a par value of $3 per share. If sufficient dividends are declared, preferred stockholders can anticipate receiving dividends of:
Answer: $30,000
Explanation:
Preferred Dividends are paid at a fixed rate based on the par value and the dividend rate.
If there are 200,000 preferred shares, the amount that is to be paid to them in dividends every year would be;
= 200,000 * 5% * 3
= $30,000
This amount will be paid to them if sufficient dividends are declared to cover this amount. If the shares are Cumulative, they will receive this dividend in totality eventually even if it is not the year the dividends are announced in because these kind of shares accrue the dividends.
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the double-declining-balance method.
Answer:
Annual depreciation= $48,000
Explanation:
Giving the following information:
Purchasing price= $135,000
Salvage value= $15,000
Useful life= 5 years
To calculate the depreciation expense under the double-declining method, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
Annual depreciation= 2*[(135,000 - 15,000) / 5]
Annual depreciation= $48,000
The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs. Job 602 Job 603 Job 604 Direct materials $ 1,500 $ 3,300 $ 2,700 Direct labor 800 1,420 2,100 Overhead 400 710 1,050 Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $600; direct labor, $180; and overhead, $90. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.) Required: 1. What is the cost of the raw materials used in June for each of the three jobs and in total
Answer:
June Costs of the raw materials used for each of the three jobs and in total.
Job 602 Job 603 Job 604 Total
Direct materials $ 900 $ 3,300 $ 2,700 6900
Explanation:
Business Solutions
Job 602 Job 603 Job 604
Direct materials $ 1,500 $ 3,300 $ 2,700
Direct labor 800 1,420 2,100
Overhead 400 710 1,050
Job 602 May: Costs
Direct Materials, $600;
Direct Labor, $180;
Overhead, $90
June Costs of the raw materials used for each of the three jobs and in total.
Job 602 Job 603 Job 604 Total
Direct materials $ 900 $ 3,300 $ 2,700 6900
Job 602 total costs are $ 1500 and raw materials costs in May are $ 600. The remaining $ 900 is consumed in June.
Raw materials Job 603 and 604 are consumed in June in full amount
Jeff visited a car dealership and test-drove a used car. After discussing the price with Jake, a salesman at the dealership, and learning that he could buy the car for $500 less than the sticker price, Jeff asked Jake to hold the car for him until 8:00 PM that evening so he could bring his wife back to the dealership to see the car. Jake agreed, writing out a note promising not to sell the car until 8:00 PM. The note was written on dealership letterhead, but Jake did not sign his name. The dealership broke that promise and sold the car to Bill before 8:00 PM. Was the dealership free to sell the car? Can Jeff sue Bill and recover the car? Does Bill have a claim against the dealership?
Answer:
Since this whole sales agreement is about a car, then it falls under the statute of frauds. Any sales contract or offer for any amount of $500 or more needs to be signed. We are not told the final price of the car, but if we consider that only the discount was $500, then we can assume that the price of the car was higher than that. Since the note was not signed, then the promise is not valid.
"The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its variable cost per unit is $30, and its fixed cost per unit is $11. Top management of Kobe International would like the Heating Division to transfer 14,900 heating units to another division within the company at a price of $33. Assume that the Heating Division has sufficient excess capacity to provide the 14,900 heating units to the other division. What is the minimum transfer price that the Heating Division should accept
Answer: $30
Explanation:
The formula to determine the transfer price is;
Transfer price = Differential cost to selling division + Opportunity cost of selling internally
The Differential cost is the Variable cost of producing the heating units so is $30.
The Opportunity cost of selling internally refers to if any sales will be foregone outside by selling inside. As the Heating Division has sufficient excess capacity, outside sales will not be affected so this cost is $0.
Transfer Price = 30 + 0
= $30
Several years ago, Macro Riders issued preferred stock with a stated annual dividend of 5% of its $600 par value. Preferred stock of this type currently yields 10%. Assume dividends are paid annually. a. What is the estimated value of Macros preferred stock
Answer: $300
Explanation:
The Value of a Preferred Stock is derived like a perpetuity in that it is calculated by dividing the annual cash return received by the annual yield/interest.
The stated annual dividend is 5% of $600;
= 5% * 600
= $30
Value of the Preferred Stock = [tex]\frac{Annual Cash Return}{Annual Yield}[/tex]
= [tex]\frac{30}{0.10}[/tex]
= $300
At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $11,400 and liabilities of $5,700. During the year, liabilities decreased by $1,200. Net income for the year was $3,050, and net assets at the end of the year were $6,150. There were no changes in paid-in capital during the year.
Required:
Calculate the dividends, if any, declared during the year.
Stockholders' Equity
Assets = Liabilities + PIC + RE
Beginning $11,900 = $6,300 + 0 +
Changes = (1,200) + 0 +
Ending = + +
Answer:
$8,750
Explanation:
ASSETS = LIABILITIES + PAID IN CAPITAL + RETAINED EARNINGS
beginning of the year:
$11,400 = $5,700 + paid in capital + retained earnings
paid in capital + beginning retained earnings = $5,700
end of the year:
$6,150 = $4,500 + paid in capital + retained earnings
paid in capital + ending retained earnings = $1,650
ending retained earnings = beginning retained earnings + net income - dividends = beginning retained earnings + $3,050 - dividends
paid in capital + beginning retained earnings - $5,700 = 0
paid in capital + beginning retained earnings + $3,050 - dividends - $1,650 = 0
let X = paid in capital
let Y =beginning retained earnings
X + Y - $5,700 = X + Y + $3,050 - dividends
we eliminate X and Y
-$5,700 = $3,050 - dividends
dividends = $5,700 + $3,050 = $8,750