Reference no: EM131134607
The stockholders' equity accounts of Fernandez, Inc., at January 1, 2010, are as follows.
Preferred Stock, no par, 4,000 shares issued .... $400,000
Common Stock, no par, 140,000 shares issued ... 700,000
Retained Earnings ............... 500,000
During 2010, the company had the following transactions and events.
July 1 Declared a $0.50 cash dividend on common stock.
Aug. 1 Discovered a $72,000 overstatement of 2009 depreciation expense. (Ignore income taxes.)
Sept. 1 Paid the cash dividend declared on July 1.
Dec. 1 Declared a 10% stock dividend on common stock when the market value of the stock was $12 per share.
15 Declared a $9 per share cash dividend on preferred stock, payable January 31, 2011.
31 Determined that net income for the year was $320,000.
Instructions
With the class divided into groups, answer the following questions.
(a) Prepare a retained earnings statement for the year. There are no preferred dividends in arrears.
(b) Discuss why the overstatement of 2009 depreciation expense is not treated as an adjustment of the current year's income.
(c) Discuss the reasons why a company might decide to issue a stock dividend rather than a cash dividend.
Define decision variables-objective function and constraints
: Rienzi Farms grows sugar cane and soybeans on its 500 acres of land. An acre of soybeans brings a $1000 contribution to profit; an acre of sugar cane has a contribution of $2000. Because of a government program no more than 200 acres may be planted i..
|
How data was used to calculate wacc
: A discussion of how much confidence you have in your answer. What were the limiting assumptions that you made, if any. How data was used to calculate WACC. This would be the formula and the formula with your values substituted.
|
What is the annual ordering cost and annual holding cost
: Groundz Coffee Shop uses 4 pounds of a specialty tea weekly; each pound costs $16. Carrying costs are $0.25 per pound. It costs the firm $8 to prepare an order. Assume the basic EOQ model with no shortages applies. Assume 52 weeks per year. What is t..
|
Visit the web site of defenders of wildlife
: Defenders of Wildlife. Each of the 80,000 citizens in a particular county is willing to pay $0.10 to increase the number of wolf litters by one. Each litter of wolves imposes a cost of $5,000 in livestock losses to ranchers.
|
Discuss why the overstatement of 2009 depreciation
: Discuss why the overstatement of 2009 depreciation expense is not treated as an adjustment of the current year's income.
|
Describe how state certificate of need programs
: Describe how state Certificate of Need (CON) programs and Medicare Prospective Payment Systems (PPS) help decrease health care spending. Cite references to support your response.
|
Demonstrates the effective communication skills
: In finance each student is required to complete a paper that demonstrates effective communication skills, research competence, and technology fluency
|
Design an incentive system to generate efficient questioning
: At what level of confusion (measured by the number of confused students) is a question from a confused student socially efficient?
|
A transfer function model to data from a gas furnace
: Box, Jenkins, and Reinsel [1994] fit a transfer function model to data from a gas furnace. The input variable is the volume of methane entering the chamber in cubic feet per minute and the output is the concentration of carbon dioxide emitted. The..
|