1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Tresset [83]
3 years ago
6

Eddie Zambrano Corporation began operations on January 1, 2017. During its first 3 years of operations, Zambrano reported net in

come and declared dividends as follows.
Net Income Dividends Declared
2017 $ 40,000 $ –0–
2018 125,000 50,000
2019 160,000 50,000
The following information relates to 2020.
Income before income tax $240,000
Prior period adjustment: understatement of 2018 depreciation expense (before taxes) $ 25,000
Cumulative decrease in income from change in inventory methods (before taxes) $ 35,000
Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2021) $100,000
Effective tax rate 20%
Instructions
a. Prepare a 2020 retained earnings statement for Eddie Zambrano Corporation.
b. Assume Eddie Zambrano Corporation restricted retained earnings in the amount of $70,000 on December 31, 2020. After this action, what would Zambrano report as total retained earnings in its December 31, 2020, balance sheet?
Business
1 answer:
Oksanka [162]3 years ago
8 0

Answer:

Eddie Zambrano Corporation

a. Retained Earnings Statement for the year ended December 31, 2020

Retained earnings, January 1, 2020 = $225,000

2020 Income after tax =                        $192,000

Prior period adjustment: understatement of 2018 depreciation expense (before taxes)                                        ($ 25,000)

Cumulative decrease in income from change in inventory methods (before taxes)                                        ($ 35,000)

Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2021)

                                                             ($100,000)

Total deductions =                                $160,000

Retained earnings, December 31       $257,000

b. With the restricted retained earnings in the amount of $70,000, dividends declared cannot exceed $62,000 ($100,000 - $38,000), therefore the Retained earnings in its December 31, 2020 balance sheet would be $295,000.

Explanation:

a) Data and Calculations:

        Net Income   Dividends Declared  Cumulative Retained Earnings

2017    $ 40,000         $ –0–                       $40,000 ($40,000)

2018     125,000            50,000                    115,000 ($40,000 + 75,000)

2019     160,000           50,000                   225,000 ($115,000 + 110,000)

2020 Income before tax = $240,000

Tax for 2020 (20%)                 48,000

2020 Income after tax =     $192,000

Prior period adjustment: understatement of 2018 depreciation expense (before taxes) $ 25,000

Cumulative decrease in income from change in inventory methods (before taxes) $ 35,000

Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2021) $100,000

Total deductions = $160,000 ($25,000+35,000+100,000)

Retained earnings for 2020 = $32,000 ($192,000 - $160,000)

a. Retained Earnings Statement for the year ended December 31, 2020

Retained earnings, January 1, 2020 = $225,000

2020 Income after tax =                        $192,000

Prior period adjustment: understatement of 2018 depreciation expense (before taxes)                                        ($ 25,000)

Cumulative decrease in income from change in inventory methods (before taxes)                                        ($ 35,000)

Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2021)

                                                             ($100,000)

Total deductions =                                $160,000

Retained earnings, December 31       $257,000

b. With the restricted retained earnings in the amount of $70,000, dividends declared cannot exceed $62,000 ($100,000 - $38,000), therefore the Retained earnings in its December 31, 2020 balance sheet would be $295,000 ($257,000 + $38,000).

You might be interested in
Dependable Appliances, Inc. and Elain enter into a contract for a sale of kitchen appliances. Dependable, a merchant who deals i
Anuta_ua [19.1K]

Answer:

B) fit for the ordinary purpose for which such goods are used.

Explanation:

An implied warranty of merchantability means that the products sold should fulfill an ordinary buyer's expectations and should be fit for the purpose intended.

All products carry an implied warranty of merchantability unless expressly disclaimed or identified as a sale "with all faults" or "as is".

6 0
3 years ago
Macro economic misery diminished during the first reagan administration, which means that the phillips curve'
tensa zangetsu [6.8K]
Had to look for the options and here is my answer. What it means when there is a decrease in the Macro economic misery during the first Reagan administration is that the Phillips Curve has shifted from right to left. This implies that there is an ease of the trade-off between the unemployment and inflation. Hope this answer helps.
7 0
3 years ago
On July​ 1, 2019, Montana Company has bonds with balances as shown below. Bonds Payable 66,000 Discount on Bonds Payable 3,800 I
Otrada [13]

Answer:

Loss on the retirement of $4,750

Explanation:

The following have the effect on the income statement which is a loss on the retirement and it amounts to $4,750

It is computed as:

Loss on retirement = Retirement value of the bonds - Issued price of the bonds

= $71,150 - $66,400

= $4,750

Working Note:

Issued Price of bonds = Face value - Discount on bonds payable

= $70,000 - $3,600

= $66,400

7 0
3 years ago
59. A poultry rancher discovered that when she increased the price of organic eggs from $0.75 to $1.00 per dozen, the sales of h
oee [108]

Answer:

PED = -1.4 or |1.4| in absolute values, price elastic

Explanation:

the price elasticity of demand (PED) using the midpoint method:

PED = % change in quantity / % change in price

  • % change in quantity = {(Q 2 − Q1 ) / [(Q2 + Q1)/2]} x 100 = {(200 − 300 ) / [(200 + 300)/2]} x 100 =  -100 / 250 = -0.4
  • % change in price = {(P2 − P1 ) / [(P2 + P1)/2]} x 100 = {(1 − 0.75 ) / [(1 + 0.75)/2]} x 100 = 0.286

PED = -0.4 / 0.286 = -1.4 or |1.4| in absolute values

5 0
3 years ago
The following are a few of the accounts of aim delivery corpation. 1. Wages Payable 2. Accounts Payable 3. Accounts Receivable 4
DedPeter [7]

Answer and Explanation:

The classification is as follows

1. current liability

2.  current liability

3. Current assets

4. Non current asset or fixed asset

5. Current asset

6. Stockholder equity

7. Non current asset or fixed asset

8. Current liability

9. Non currnet asset or fixed asset

10 Current liability

11 Stockholder equity

12 Current asset

13 Current liability

8 0
3 years ago
Other questions:
  • Problem 2 A bakery buys flour in 25-pound bags. The bakery uses 1,215 bags a year. Ordering cost is $10 per order, Annual carryi
    11·1 answer
  • Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $135 per unit. T
    8·1 answer
  • ÂOaktree, Inc. is a merchandiser of inlaid wooden boxes. The company sold 7,500 units during the year. The company has provided
    7·1 answer
  • Suppose you find that prices of stocks before large dividend increases show on average consistently positive abnormal returns. i
    11·2 answers
  • In the Baldrige assessment, _____ refers to how a company refines the approach through cycles of evaluation and improvement, enc
    6·1 answer
  • Annual starting salaries for college graduates with degrees in business administration are generally expected to be between $43,
    8·1 answer
  • In recent times, only __________ median income of about $56,000 exceeded that of the united states at about $50,000.
    11·1 answer
  • The council members of a small town have decided that the earth levee that protects the town from flooding should be rebuilt and
    13·1 answer
  • Loan 1:
    10·1 answer
  • 20. The shipment of goods or rendering of services to a foreign buyer, located in a
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!