What NET reduction in retained earnings would result from this property dividend?
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A: D) Market value of the property at the date of declaration.
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Answer:
To determine the net reduction in retained earnings resulting from the property dividend, we need to calculate the fair value of the property dividend and then subtract it from the retained earnings.
First, let's calculate the number of Flint shares that Ivanhoe will distribute as a property dividend:
Ivanhoe owns 20,000 shares of Flint
The property dividend is one share of Flint for every ten shares of Ivanhoe held
Therefore, Ivanhoe will distribute 2,000 shares of Flint as a property dividend (20,000 / 10)
Next, let's calculate the fair value of the property dividend:
The market price of Flint on September 15, 2026, was $30 per share
Ivanhoe will distribute 2,000 shares of Flint
Therefore, the fair value of the property dividend is $60,000 (2,000 x $30)
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- Hyde Corporations capital structure at December 31, 2018, was as follows: On July 2, 2019, Hyde issued a 10% stock dividend on its common stock and paid a cash dividend of 2.00 per share on its preferred stock. Net income for the year ended December 31, 2019, was 780,000. What should be Hydes 2019 basic earnings per share? a. 7.80 b. 7.09 c. 7.68 d. 6.73On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.Stinson Corporation owned 40,000 shares of Matile Corporation. These shares were purchased in 2017 for $360,000. On November 15, 2021, Stinson declared a property dividend of one share of Matile for every ten shares of Stinson held by a stockholder. On that date, when the market price of Matile was $28 per share, there were 360,000 shares of Stinson outstanding. What gain and net reduction in retained earnings would result from this property dividend? Net Reduction in Gain Retained Earnings a. $0 $ 324,000 b. $0 $1,008,000 c. $684,000 $ 324,000 d. $684,000 $ 144,000
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- On January 1, 2022, Mojito Corporation purchased 20% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $153,000. During 2022, Dulcinea Corporation paid total dividends of $45,000 and earned $80,000 in net income. At the end of 2022, Dulcinea Corporation’s stock had a fair market value of $155,000. Required: Prepare the journal entries that Mojito would make during 2022 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (i.e. fair value method). Prepare the journal entries that Mojito would make during 2022 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).On April 15, 2023, Rizzo Inc. purchased 34,500 shares of Hernandez, Inc. for $22 per share (passive interest). During the year Rizzo Inc. sold 4,500 shares of Hernandez, Inc. for $25 per share. Rizzo Inc. started operations on January 1, 2023. At December 31, 2023 the market price of Hernandez, Inc.’s stock was $19 per share. What is the total amount of unrealized gain (loss) that Rizzo Inc. will report through its income statement for the year ended December 31, 2023 related to its investment in Hernandez, Inc. stock?ABC Co. purchased 10,000 shares (2% ownership) of DEF Co. on February 14, 2020. ABC Co. received a share dividend of 2,000 shares on April 30, 2020, when the market value per share was P35. DEF Co. paid a cash dividend of P2 per share on December 15, 2020. In its 2020 income statement, what amount should ABC Co. report as dividend income?
