A. $16,500 B. $9,000 C. $25,500 D. $7,500 E. $50,000 Difficulty: Easy 2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2008, Dew reported income of $250,000 and paid dividends of $80,000.
Problems (p.112) (3-1) Days Sales Outstanding Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year. Ans: DSO (Days Sales Outstanding) = Accounts Receivables/Average Sales per day Accounts Receivables = 20 * 20000 = $400,000 (3-2) Debt Ratio Vigo Vacations has an equity multiplier of 2.5.
DSO = Receivables / Ave. sales per day Receivables= DSO * Ave. sales per day = 20 * 20,000 Receivables= $400,000 (3-2) Debt Ratio: Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Debt ratio = 1 – (1 / Equity multiplier) Debt ratio = 1 – (1/2.5) = 1 - .40 = .60 Debt ratio = 60% (3-3) Market/Book Ratio: Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets.
| C. | $99,000. | D. | $51,000. | E. | $80,000. | | 3. | On January 1, 2013, Pacer Company paid $1,920,000 for 60,000 shares of Lennon Co.'s voting common stock which represents a 45% investment.
$600,000 Chapter 18 In-Class Problems (with solutions) ACG3151 How much of the dividend will be paid to the common shareholders, and how much will be paid to the preferred shareholders? Common Shareholders=$10,000 Preferred Shareholders=$80,000($60,000 cumulative, $20,000 participating) 3. Tom, Inc. issued 1,000,000 shares of $2 par common stock in 2005 for $9 per share. In 2008 Tom, Inc. repurchased 100,000 shares at a price of $8 per share. On March 30, 2009 they decide to resell 50,000 shares at a price of $13 per share.
GAAP? Explain in detail. (TCO C) (TCO C) Blue Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 201X, included the following expense accounts. Accounting and legal fees $150,000 Advertising $125,000 Freight-out $65,000 Interest $80,000 Loss on sale of long-term investments $35,000 Officers’ salaries $200,000 Rent for office space $160,000 Sales salaries and commissions $110,000 One half of the rented premises are occupied by the sales department.
| | | | | Score: | 0/10 | | 2. Chapter 10 - The Cost of Capital Question MC #65 Bosio Inc.'s perpetual preferred stock sells for $75.00 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?
| $780 | C. | $990 | D. | $2,430 | E. | $2,640 | | 2 | D | A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity? A. $6,900B. $15,300C.$18,700D $23,700E.
Corporation AB had a net long-term capital loss is 2005 and net operating loss in 2004. What are the earliest year(s) to which these losses can be carried? Answer: Capital loss to 2003 or 2010 and net operating loss to 2002 or 2024 3. Cloud corporation has a taxable income of $100,000 in 2005 along with a $30,000 general business credit. What is the amount of its credit carryover and the last year to which the carryover could be used?
This was the initial amount invested by two of Neverfail founding employees. 4,796,000 shares of common stock were issued at $0.01 par value. After Angel Investment: According to the case, George Lawrence and another Seattle Angel acquired 800,000 shares of convertible preferred stock at $1 per share. This gives a total of $800,000. With this new development, if we assume that the previous 4,796,000 shares of common stock that were originally issued in March of 1993 are now also worth $1 per share, this gives a total of $4,796,000.