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Rudik [331]
3 years ago
14

On November 1, 2018, Master's Co. borrows $500,000 from its bank for five years at an annual interest rate of 10%. According to

the terms of the loan, the principal amount will not be due for five years. Interest accrues monthly on the first day of each month, beginning November 1, 2018. With respect to this borrowing, Master's December 31, 2018, balance sheet included only a long-term note payable of $500,000. As a result:_______
a. Liabilities are understated by $12,500 accrued interest payable

b. Liabilities are understated by $4,167 accrued interest payable

c. The December 31, 2018, financial statements are accurately presented

d. Liabilities are understated by $8,333 accrued interest payable
Business
1 answer:
romanna [79]3 years ago
7 0

Answer:

b. Liabilities are understated by $4,167 accrued interest payable

Explanation:

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Answer:

The divided for common stockholders is $152000

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The preferred stock is cumulative whch means any arrears in preference dividend will be paid whenever the dividend is declared.

The amount of yearly preference dividends is = 12000 * 100 * 0.07 = 84000

Thus, when 320000 cash dividend is declared, 2 years ( current year and arrear year) preference dividend will be paid first and the remaining will be distributed among common stock holders.

The dividedn for common stockholders is 320000 - (84000 * 2) = $152000

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7 0
3 years ago
NoGrowth Industries presently pays an annual dividend of $ 1.90 per share and it is expected that these dividend payments will c
dybincka [34]

Answer:

$17.27

Explanation:

The stock intrinsic value is calculated using dividend discounted model (DDM). The DDM is stated as below:

Stock intrinsic value = [This year dividend x (1 + Dividend growth)]/[Equity cost of capital - Dividend growth]

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