At the end of the question and answer portion of the annual

Reference no: EM13597519

At the end of the question and answer portion of the annual stockholder's meeting of Kemper Corporation, stockholder Mike Kerwin asks, "Why did management sell the holding in UMW Company at a loss when this company has been very profitable during the period its stock was held by Kemper. Since President Tony Chavez has just concluded his speech on the recent success and bright future of Kemper, he is taken aback by this question and responds, "I remember we paid $1,300,000 for that stock some years ago, and I am sure we sold that stock at a much higher price. You must be mistaken."Kerwin retorts, Well, right here is footnote number 7 to the annual report it shows that 240000 shares, a 30% interest in UMW, were sold on the last day of the year. Also, it states that UMW earned $520,000 this year and paid out $160000 in cash dividends. Further, a summary statement indicates that in past years, while Kemper held UMW stock, UMW earned $1240000 and paid out $440000 in dividends. Finally, the income statement for this year shows a loss on the sale of UMW stock $180000. So, I doubt that I am mistaken." Red-faced, president Chavez turns to you.

a) What dollar amount did Kemper receive upon the sale of the UMW stock?
b) Explain why both stockholder Kerwin and president Chavez are correct.

Reference no: EM13597519

Questions Cloud

Many accounting writers have emphasized the effect that the : many accounting writers have emphasized the effect that the can have on managerial incentives to overproduce. when

Cash collection experience shows that 35 percent of billed : x company specializes in term life insurance contracts. cash collection experience shows that 35 percent of billed

Helen purchased 50 percent of the shares of hij corp a : helen purchased 50 percent of the shares of hij corp. a calendar year s corporation for 7000. she also guaranteed a

On december 30 2011 roberta purchased four tickets to a : on december 30 2011 roberta purchased four tickets to a charity ball sponsored by the city of san diego for the benefit

At the end of the question and answer portion of the annual : at the end of the question and answer portion of the annual stockholders meeting of kemper corporation stockholder mike

Ron and tom are equal owners in robin corporation on july 1 : ron and tom are equal owners in robin corporation. on july 1 2011 each lends the corporation 30000 at an annual

Ida sidha karya company is a family-owned company located : ida sidha karya company is a family-owned company located in the village of gianyar on the island of bali in indonesia.

Fran traveled to san francisco during the year to do : fran traveled to san francisco during the year to do volunteer work for one week for the salvation army. she normally

Upton co was started on 1-1-2011 when the owners invested : upton co. was started on 1-1-2011 when the owners invested 160000 cash in the business. during 2011 the company earned

User Account

All Pages