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zmey [24]
3 years ago
15

Rick Co. had 30 million shares of $1 par common stock outstanding at January 1, 2018. In October 2018, Rick Co.'s Board of Direc

tors declared and distributed a 1% common stock dividend when the market value of its common stock was $60 per share. In recording this transaction, Rick would:
A. Debit retained earnings for $18 million.
B. Credit paid-in capital - excess of par for $18 million.
C. Credit common stock for $18 million.
D. None of the above is correct.
Business
1 answer:
Len [333]3 years ago
4 0

Answer:

A. Debit retained earnings for $18 million.

Explanation:

Before recording the journal entry, first we have to determine the dividend shares which are shown below:

= Number of shares × par value of share × common stock dividend percentage

= 30 million shares × $1 × 1%

= 0.30 million shares

Now the journal entry would be

Retained earnings Dr $18 million       (0.30 million shares × $60)

    To Common Stock $0.30 million       (0.30 million shares × $1

    To  Additional Paid-in Capital in excess of par - Common Stock $17.7 million

(Being the dividend is declared and the remaining balance is credited to the additional paid-in capital account)

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D. Verification by each consumer would be extremely inefficient

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4 0
3 years ago
A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $48,000, v
lions [1.4K]

Answer:

$368,000

Explanation:

In order to appraise the property using the capitalization approach, we must first determine a net cash flow:

net cash flow = $48,000 - $3,600 - $15,000 = $29,400

Now we calculate the property value using the perpetuity formula:

property value = net cash flow / capitalization rate = $29,400 / 8% = $367,500 which we must round up to $368,000

A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $48,000, vacancy and credit losses of $3,600, and operating expenses of $15,000. Using a capitalization rate of 8%, what is the property's value (rounded up to the nearest $1,000)?

4 0
3 years ago
Tre-Bien Bakeries generated net income of $233,412 this year. At year end, the company had accounts receivables of $47,199, inve
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Answer:

Option B- $63510 is the correct option.

Explanation:

Remember that:

Net Working Capital = Current Assets - Current Liabilities

Current assets includes receivables, cash and inventory, and current liabilities include accounts payable, short term notes payable and accrued taxes.

Putting value of current assets and current liabilities, we have:

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Net Working Capital = $132,441 - $68931 = $63,510

So the option B is the correct option.

7 0
3 years ago
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