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Vinil7 [7]
3 years ago
15

Kevin purchased 5,000 shares of Purple Corporation stock at $10 per share. Two years later, he receives a 5% common stock divide

nd. At that time, the common stock of Purple Corporation had a fair market value of $12.50 per share. What is the basis of the Purple Corporation stock, the per share basis, and gain recognized upon receipt of the common stock dividend?
(A) $50,000 basis in stock, $10 basis per share for the original stock and $0 basis per share for the dividend shares, $0 recognized gain.
(B) $50,000 basis in stock, $9.52 basis per share, $0 recognized gain.
(C) $53,125 basis in stock, $10 basis per share for the original stock and $12.50 basis per share for the dividend shares, $3,125 recognized gain.
(D) $53,125 basis in stock, $10.12 basis per share, $3,125 recognized gain.
Business
1 answer:
Usimov [2.4K]3 years ago
6 0

Answer:

so correct option is (B) $50,000 basis in stock, $9.52 basis per share, $0 recognized gain

Explanation:

given data

purchased = 5,000 shares

per share = $10

time = 2 year

common stock dividend = 5%

fair market value = $12.50 per share

solution

we know Purple basis before stock dividends will be

Purple basis before stock dividends =$5000 ×10

Purple basis before stock dividends =$50,000

and

stock dividends of 5 % is = 5000 × 5%

stock dividends = 250 shares

so

total shares after stock dividend is = 5000 + 250

total shares after stock dividend is = 5250

and

Purple basis per share after stock dividends will be

Purple basis per share after stock dividends  = \frac{50000}{5250}

Purple basis per share after stock dividends = $9.52

so gain recognized is  

gain recognized = 5000 × 10 - 9.52 × 5250

gain recognized = 50000-50000

gain recognized = 0

so correct option is (B) $50,000 basis in stock, $9.52 basis per share, $0 recognized gain

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Bade Midwifery's cost formula for its wages and salaries is $1,420 per month plus $246 per birth. For the month of October, the
saul85 [17]

Answer:

activity variance =  $984 F

Explanation:

given data

wages and salaries = $1,420 per month

per birth = $246

planned for activity = 107  births

actual level of activity = 103 births

actual wages and salaries = $27,795

to find out

activity variance for wages and salaries

solution

we know wages and salaries cost for October is

wages and salaries Planning budget  = 1420 + ( 107 × 246 )

wages and salaries Planning budget = $27742

and

Wages and salaries  Flexible budget = 1420 + ( 103 × 246 )

Wages and salaries  Flexible budget = $26758

so

activity variance = $27742 - $26758

activity variance =  $984 F

4 0
3 years ago
Charu Khanna received a Form 1099-B showing the following stock transactions and basis during 2019 Stock Date Purchased Date Sol
AysviL [449]

Answer:

Charu Khanna

The Net capital loss is:

= $2,000.

Explanation:

a) Stock Transactions and Data during 2019:

Stock                                  Date      Date Sold  Sales Price ($) Cost Basis ($)

                                      Purchased

4,000 shares Green Co. 06/04/07 08/05/19       12,000              3,000

500 shares Gold Co.        02/12/17 09/05/19      54,000            62,000

5,000 shares Blue Co.   02/04/08  10/08/19       18,000            22,000

100 shares Orange Co.     11/15/18   07/12/19       19,000            18,000

Total                                                                   $103,000       $105,000

Net capital loss:

Long-term capital loss = $3,000

Short-term capital gain = $1,000

Net capital loss =            $2,000 ($3,000 - $1,000)

8 0
3 years ago
Baa-rated bonds currently yield 6%, while Aa-rated bonds yield 4%. Suppose that due to an increase in the expected inflation rat
ollegr [7]

Answer: The new confidence index is 0.7143

Explanation: Consumer confidence index which is known as the confidence index is an index used for estimating the economy of the U.S, it is published by the conference board which shows the decree of excitement in peoples's activities on their savings and spendings.

To calculate the new confidence index;

STEP1: Add the bond increase to the current bond;

6% + 1% = 7%

4% + 1% = 5%

STEP 2: FIND THE NEW CONFIDENCE INDEX

5% ÷ 7% = 0.7143

The old confidence index can also be calculated as

4% ÷ 6% = 0.6667

8 0
4 years ago
Mackenzie's dream is to open a chain of salons. She hopes to attract investors to help finance growth. Having once considered fo
CaHeK987 [17]

Answer: <em>Limited Liability Company</em>

Explanation:

Limited liability company also known as LLC is referred to as the United States specific type of private limited organization. It is referred to as a business structure or component that tends to combine or mix pass-through taxation for a sole proprietorship or a partnership with the tendency of a limited liability of an organization. A LLC is not an organization under the state law, it is referred to as a legal type of an organization that tends to provide a limited liability to the owners in several jurisdictions.

5 0
3 years ago
Accrued Product Warranty Fosters Manufacturing Co. warrants its products for one year. The estimated product warranty is 4% of s
Finger [1]

Answer:

a.

Date                     Account Title                                          Debit             Credit

Jan. 31                 Product Warranty Expense                 $15,160

                            Product Warranty Payable                                        $15,160

<u>Working:</u>

Product warranty expense = Amount of sales for January * Estimated product warranty

= 379,000 * 4%

= $15,160

b.

Date                     Account Title                                          Debit             Credit

Jan. 31                 Product Warranty Payable                     $355

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                            Wages payable                                                          $105

The costs of the warranty will be taken from the liability account for warranties  because the warranty payable account represents that the company owes warranty repairs which the customer just came to collect.

5 0
3 years ago
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