On January 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets for $5 per share. This purchase gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa Doc Donuts purchased an additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchie's Beignets. This latest purchase gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets. The original 7.5% investment was categorized and accounted for as an available for sale security. Frenchie's Beignets reports net income cash dividends and per share prices as follows. These amounts are assumed to have occurred evenly throughout these years. Cash dividends are declared and paid in the same period. Per Share Price Year 2011 Cash Dividends $180,000 (December 31st Spot Rate) $6.50 Net Income S600,000 2012 $520,000 $480,000 $190,000 $5.50 2013 $145,000 $7.00

On January 1, 2011, Papa Doc Donuts, purchased 30,000 shares of Frenchie's Beignets for $5 per share. This purchase gives Papa Doc Donuts a 7.5% stake in Frenchie's Beignets. On January 1, 2013, Papa Doc Donuts purchased an additional 90,000 shares for $6 per share gaining an additional 22.5% stake in Frenchie's Beignets. This latest purchase gave Papa Doc Donuts the ability to apply significant influence over Frenchie's Beignets. The original 7.5% investment was categorized and accounted for as an available for sale security. Frenchie's Beignets reports net income cash dividends and per share prices as follows. These amounts are assumed to have occurred evenly throughout these years. Cash dividends are declared and paid in the same period. Per Share Price Year 2011 Cash Dividends $180,000 (December 31st Spot Rate) $6.50 Net Income S600,000 2012 $520,000 $480,000 $190,000 $5.50 2013 $145,000 $7.00

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter6: Corporations: Redemptions And Liquidations

Section: Chapter Questions

Problem 64P

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