Ask question

Ask question

All categories

3 years ago

13

Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those d

ividends affect the net income of the investor under the Fair Value Method and the Equity Method, respectively?

1 answer:

Readme [11.4K]3 years ago

8 0

Answer:

Under the equity method, cash dividends reduce the carrying value of the investment account (asset account), they are not considered income. For e.g.

Journal entry to record investment

Dr Investment in Santo Corporation 100,000

Cr Cash 100,000

Journal entry to record cash dividend

Dr Cash 5,000

Cr Investment in Santo Corporation 5,000

Under the fair value method, cash dividends are considered income, therefore, they increase net income. For e.g.

Journal entry to record investment

Dr Investment in Santo Corporation 100,000

Cr Cash 100,000

Journal entry to record cash dividend

Dr Cash 5,000

Cr Dividend income 5,000

You might be interested in

During 2020, Dyrdek’s Skate Shop, Inc., had a cash flow to creditors of –$60,000 and the cash flow to stockholders for the year

sukhopar [10]

Answer:

$1,271,000

Explanation:

Calculation for What was the firm’s 2020 operating cash flow, or OCF

First step is to calculate the Cash flow from assets using this formula

Cash flow from assets=Cash flow to creditors + Cash flow to stockholders

Let plug in the formula

Cash flow from assets=–$60,000 + $70,000

Cash flow from assets = $10,000

Now let calculate the operating cash flow using this formula

Operating cash flow=Cash flow from assets-Reduction in Net working capital investment+Net capital spending

Let plug in the formula

Operating cash flow=$10,000-$59,000+$1,320,000

Operating cash flow=$1,271,000

Therefore the firm’s 2020 operating cash flow, or OCF will be $1,271,000

8 0

3 years ago

Feeney Furniture prepared the following sales budget: Month Cash Sales Credit Sales March $19,000 $11,000 April $40,000 $11,0

marusya05 [52]

Answer:

total cash collections in June = $101050

so correct option is A. $101,050

Explanation:

given data

month cash sales credit sale

march $19,000 $11,000

April $40,000 $11,000

May $43,000 $35,000

June $59,000 $50,000

to find out

total cash collections in June at Feeney Furniture

solution

we find here total cash collections in June that is express as

total cash collections in June = cash sale in June + ( credit sale in June × 62% ) + ( credit sale in May × 30%) + ( credit sale in April × 5%) .............1

put here value we get

total cash collections in June = $59000 + ( $50000 × 62% ) + ( $35000 × 30%) + ( $11000 × 5%)

total cash collections in June = $101050

so correct option is A. $101,050

8 0

3 years ago

Read 2 more answers

Bogart Company is considering two alternatives. Alternative A will have revenues of $146,100 and costs of $104,400. Alternative

irinina [24]

Answer:

Choosing alternative B would increase net income by $17,100

Explanation:

The analysis showing the incremental revenues,costs and net income of alternative A and B is shown below:

Alternative A Alternative B Difference between A&B

Revenues $146,100 $185,900 $39800

Costs ($104,400) ($127,100) ($22700 )

Net income $41,700 $58,800 $17,100

Alternative B records a higher net income compared to Alternative A,hence choosing alternative B would increase net income by $17,100

r

4 0

3 years ago

Ramon has been appointed the manager of a retail store. He wants to bring the store into the modern era and direct its future by

nika2105 [10]

Answer:

C. install mannequin robots to display clothes

Explanation:

Among the offered answers, a truly avantgarde, modern approach is <u>to implement robot mannequins in the store.</u> With this tactic, customers would be incentivized to approach this innovative customer journey. Through pioneering this technique, Ramon's company would get a competitive advantage through visual merchandising.

6 0

3 years ago

At the end of each day, panera bread restaurants donate leftover bread and baked goods to food banks and local charities. the co

Nimfa-mama [501]

Answer:

They appear to be giving back to the community with food to help the hungry or the homeless.

Explanation:

In the paragraph above they mention practicing. Greenwashing can make a company appear to be more environmentally friendly than it really is. My hope is panera really is doing this for the greater good.

4 0

3 years ago

Read 2 more answers