Custom Bundle: Accounting, Loose-leaf Version, 26th + Working Papers, Chapters 1-17, 26th Edition
26th Edition
ISBN: 9781305714731
Author: Warren/Reeve/Duchac
Publisher: Cengage
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Chapter 13, Problem 13.5CP
(1)
To determine
Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.
To discuss: The factors, which should be considered by the board of directors in deciding whether to declare a cash dividend for the last quarter of 2016
(2)
To determine
To discuss: The issuance of a stock dividend from the point of view of (a) a stockholder and (b) the board of directors.
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Munson Communications Company has just reported earnings for the year ended June 30, 2011. Below are the firm’s income statement and balance sheet. The Company had a 55 percent dividend payout ratio for the last 10 years and does not plan to change this policy. Based on internal forecasts, the company expects the demand for its products to grow at a rate of 18 percent for the next year and has projected the sales growth for 2012 to be 18 percent. Assume that equity accounts and long-term debt do not vary directly with sales, but change when retained earnings change or additional capital is issued.
Munson Communications Company Balance Sheet as of June 30, 2011
Assets:
Liabilities and Stockholders’ Equity:
Cash
$1,728,639
Accounts payables
$4,666,673
Accounts receivables
3,009,421
Notes payables
2,507,094
Inventories
11,492,993
Total current assets
$16,231,054
Total current liabilities
$7,173,767
Net fixed assets
22,380,636
Long-term debt
13,345,242…
Chapter 13 Solutions
Custom Bundle: Accounting, Loose-leaf Version, 26th + Working Papers, Chapters 1-17, 26th Edition
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