Swifty's Vegetable Market had the following transactions during 2020: 1. Issued $53000 of par value common stock for cash. 2. Repaid a 6 year note payable in the amount of $21100. 3. Acquired land by issuing common stock of par value $104000. 4. Declared and paid a cash dividend of $2500. 5. Sold a long-term investment (cost $2600) for cash of $8000. 6. Acquired an investment in IBM stock for cash of $14500. What is the net cash provided used by investing activities? O $14500 O $8000 $37000 O ($6500)

Swifty's Vegetable Market had the following transactions during 2020: 1. Issued $53000 of par value common stock for cash. 2. Repaid a 6 year note payable in the amount of $21100. 3. Acquired land by issuing common stock of par value $104000. 4. Declared and paid a cash dividend of $2500. 5. Sold a long-term investment (cost $2600) for cash of $8000. 6. Acquired an investment in IBM stock for cash of $14500. What is the net cash provided used by investing activities? O $14500 O $8000 $37000 O ($6500)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 5P: Balance Sheet Calculations Cornerstone Development Companys balance sheet information at the end of...

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Future Values and Long-Term Investments Portman Corporation engaged in the following transactions during 2020: a. On January 1, 2020, Portman deposited $12,000 in a certificate of deposit paying 6% interest compounded semiannually (3% per 6-month period). The certificate will mature on December 31, 2023 b. On January 1, 2020, Portman established an account with Lee County Bank. Portman will make quarterly payments of $2,500 to Lee beginning on March 31, 2020, and ending on December 31, 2021. Lee guarantees an interest rate of 8% compounded quarterly (2% per 3-month period). Required: 1. Prepare the cash flow diagram for each of these two investments. 2. Calculate the amount to which each of these investments will accumulate at maturity. (Note: Round answers to two decimal places.)
ALTERNATIVE DIVIDEND POLICIES In 2018, Keenan Company paid dividends totaling 3,600,000 on net income of 10.8 million. Note that 2018 was a normal year and that for the past 10 years, earnings have grown at a constant rate of 10%. However, in 2019, earnings are expected to jump to 14.4 million and the firm expects to have profitable investment opportunities of 8.4 million. It is predicted that Keenan will not be able to maintain the 2019 level of earnings growth because the high 2019 earnings level is attributable to an exceptionally profitable new product line introduced that year. After 2019, the company will return to its previous 10% growth rate. Keenans target capital structure is 40% debt and 60% equity. a. Calculate Keenans total dividends for 2019 assuming that it follows each of the following policies: 1. Its 2019 dividend payment is set to force dividends to grow at the long-run growth rate in earnings. 2. It continues the 2018 dividend payout ratio. 3. It uses a pure residual dividend policy (40% of the 8.4 million investment is financed with debt and 60% with common equity). 4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual dividend policy. b. Which of the preceding policies would you recommend? Restrict your choices to the ones listed but justify your answer. c. Assume that investors expect Keenan to pay total dividends of 9,000,000 in 2019 and to have the dividend grow at 10% after 2019. The stocks total market value is 180 million. What is the companys cost of equity? d. What is Keenans long-run average return on equity? [Hint: g = Retention rate ROE = (1.0 Payout rate)(ROE)] e. Does a 2019 dividend of 9,000,000 seem reasonable in view of your answers to parts c and d? If not, should the dividend be higher or lower? Explain your answer.
LONG-TERM FINANCING NEEDED At year-end 2019, total assets for Arrington Inc. were 1.8 million and accounts payable were 450,000. Sales, which in 2019 were 3.0 million, are expected to increase by 25% in 2020. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to 500,000 in 2019, and retained earnings were 475,000. Arrington plans to sell new common stock in the amount of 130,000. The firms profit margin on sates is 5%; 35% of earnings will be retained. a. What were Arringtons total liabilities in 2019? b. How much new long-term debt financing will be needed in 2020? (Hint: AFN - New stock = New long-term debt.)
ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.s 2019 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of December 31, 2019 Morrissey Technologies Inc.: Income Statement for December 31, 2019 Suppose that in 2020, sales increase by 10% over 2019 sales. The firm currently has 100,000 shares outstanding. It expects to maintain its 2019 dividend payout ratio and believes that its assets should grow at the same rate as sales. The firm has no excess capacity. However, the firm would like to reduce its operating costs/sales ratio to 87.5% and increase its total liabilities-to-assets ratio to 30%. (It believes its liabilities-to-assets ratio currently is too low relative to the industry average.) The firm will raise 30% of the 2020 forecasted interest-bearing debt as notes payable, and it will issue long-term bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short- and long-term debt) is 12.5%. Assume that any common stock issuances or repurchases can be made at the firms current stock price of 45. a. Construct the forecasted financial statements assuming that these changes are made. What are the firms forecasted notes payable and long-term debt balances? What is the forecasted addition to retained earnings? b. If the profit margin remains at 6.25% and the dividend payout ratio remains at 60%, at what growth rate in sales will the additional financing requirements be exactly zero? In other words, what is the firms sustainable growth rate? (Hint: Set AFN equal to zero and solve for g.)
Balance Sheet Calculations Cornerstone Development Companys balance sheet information at the end of 2019 and 2020 is provided in random order, as follows: Additional information: At the end of 2019, (a) the amount of long-term liabilities is twice the amount of current liabilities and (b) there are 2,900 shares of common stock outstanding. During 2020, the company (a) issued 100 shares of common stock for 25 per share, (b) earned net income of 20,600, and (c) paid dividends of 1 per share on the common stock outstanding at year-end. Required: Next Level Fill in the blanks lettered (a) through (p). All of the necessary information is provided. (Hint: It is not necessary to calculate your answers in alphabetical order.)
DIVIDENDS Brooks Sporting Inc. is prepared to report the following 2019 income statement (shown in thousands of dollars). Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 320,000 shares of common stock outstanding, and its stock trades at 37 per share. a. The company had a 25% dividend payout ratio in 2018. If Brooks wants to maintain this payout ratio in 2019, what will be its per-share dividend in 2019? b. If the company maintains this 25% payout ratio, what will be the current dividend yield on the companys stock? c. The company reported net income of 1.35 million in 2018. Assume that the number of shares outstanding has remained constant. What was the companys per-share dividend in 2018? d. As an alternative to maintaining the same dividend payout ratio. Brooks is considering maintaining the same per-share dividend in 2019 that it paid in 2018. If it chooses this policy, what will be the companys dividend payout ratio in 2019? e. Assume that the company is interested in dramatically expanding its operations and that this expansion will require significant amounts of capital. The company would like to avoid transactions costs involved in issuing new equity. Given this scenario, would it make more sense for the company to maintain a constant dividend payout ratio or to maintain the same per-share dividend? Explain.
Jupiter Bank decides to invest in trading securities in order to take advantage of short-term gains. The bank purchased the following securities for the year 2020. Jan. 15, 2020 Purchased 1,000 shares of Corbin Company common stock for $89 per share. May 23, 2020 Purchased 1500 shares of Petro Company common stock for $75 per share. At the end of 2020, Corbin Company's common stock was trading on the market at $93 per share, and Petro's common stock had a market price of $70 per share. Required: 1. Prepare journal entries to record the preceding information. 2. What is the unrealized holding gain or loss and where is it reported on the 2020 financial statements? Enter your answer as positive amount.
Instrument Corporation has the following investment which was held throughout 2021–2022. Assume the organization has invested in stock and holds 40%. Fair Value Cost 12/31/21 Equity investment $900,000 $1,200,000 A. Record the initial investment. B. Total dividends paid equal $400,000. Record the dividends. C. Total Net Income for the year equals $600,000. Record the income. D. If Instrument increased its investment to 55%, what would occur? Explain your answer.
Payout-B Early in the year, EasyCo repurchased $25 mill. worth of its common shares to use for employee incentive plan awards. Easy also late in the year issued $75 mill. of new common shares into the market. EasyCo reported Dividends paid to shareholders of $100 million for 2020. What was Easy’s Net Payout to Shareholders for 2020?
Assume your organization wishes to make a Php 200,000 investment with a private equity firm in 2021. Taking into account all of the risks, the current discount rate is 12%, and the revenue stream/dividends are as follows: 2022 50002023 60002024 70002025 80002026 90002027 100002028 11000 Determine the following: DO IT IN EXCELa. NPV for the period 2022 through 2028;b. Total NPV using manual computation;c. Total NPV using the Excel function; andd. IRR rate.
E-On January 1, 2020, Orr Co. established a stock appreciation rights plan for its executives. They could receive cash at any time during the next four years equal to the difference between the market price of the common stock and a preestablished price of $16 on 600,000 SARs. The market price is as follows: 12/31/20—$21; 12/31/21—$18; 12/31/22—$19; 12/31/23—$23. On December 31, 2022, 95,000 SARs are exercised, and the remaining SARs are exercised on December 31, 2023. Instructions (a) Prepare a schedule that shows the amount of compensation expense for each of the four years starting with 2020. (b) Prepare the journal entry at 12/31/21 to record compensation expense. (c) Prepare the journal entry at 12/31/23 to record the exercise of the remaining SARs
1. The Skywalker Industries has incorporated and started operations in 2021; it went public in 2022 with a common stock, preferred stock, rolling over commercial paper (short term note) and additional bond offerings. The following financial information has been gathered on the last day of the year, December 31, 2022. 2022 2021 Sales Cost of Goods Sold - % of sales 10,000,000 60% SG&A 2,000,000 Depreciation (%) 20% 20.00% 'Issued Short term Commercial Paper 300,000 50,000.00 1,000,000 *New Debt Issued 200,000.00 Interest Rate on borrowed funds 10% 10% "Common Stock Issued $ 3.000.000 300,000.00 Shares Issued 60,000 10,000.00 10% Preferred Share Sold at par 1,000,000 0.00 25,000.00 Cash Receivable 2,000,000 Inventory 1,600,000 80,000.00 *Property, Plant & Equipment (PPE) - cost 5,000,000 500,000.00 Payables 2,500,000 30,000.00 Current (paid) Taxes 220,000 Common Dividend 120,000 8% Preferred Dividend Rate 1- short term notes are borrowed…