Otter Tail, Inc., began operations in January 2015 and had the following reported net income or loss for each of its 5 years of operations:
At December 31, 2019, Otter Tail’s capital stock was comprised of the following:
Otter Tail has never paid a cash or stock dividend. There has been no change in the capital accounts since Otter Tail began operations. The appropriate state law permits dividends only from
Required:
Prepare a worksheet showing the maximum amount available for cash dividends on December 31, 2019, and how it would be distributable to the holders of the common shares and each of the
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Chapter 16 Solutions
Intermediate Accounting: Reporting And Analysis
- On December 31, 2019, the Bradshaw Corporation had $515,000 as an ending balance for its retained earnings account. During 2020, the corporation declared a $2.50/share dividend to its stockholders. The Bradshaw Corporation has 40,000 shares of common stock outstanding. When the books were closed for 2020 year-end, the corporation had a final retained earnings balance of $565,000. What was the net profit earned by Bradshaw Corporation during 2020?arrow_forwardAt the beginning of 2020, Tucker Corporation had assets of $350,000 and liabilities of $175,000. At theend of 2020, Tucker had assets of $450,000 and liabilities of $70,000. Its shareholders’ equity consistedof common shares and retained earnings. Required:1. what the change in Tucker’s shareholders’ equity during 2020. Assume that Tucker issued no additional common shares and declared no dividends, determineTucker’s net income or net loss for 2020. Assume that Tucker issued additional common shares for $40,000 cash and declared dividendstotaling $22,000, determine Tucker’s net income or net loss for 2020.arrow_forwardThe Crump Companies, Inc., has ownership interests in several public companies. At the beginning of 2018, thecompany’s ownership interest in the common stock of Silken Properties increased to the point that it becameappropriate to begin using the equity method of accounting for the investment. The balance in the investmentaccount was $31 million at the time of the change. Accountants working with company records determined thatthe balance would have been $48 million if the account had been adjusted to reflect the equity method.Required:1. Prepare the journal entry to record the change in accounting principle. (Ignore income taxes.)2. Briefly describe other steps Crump should take to report the change.3. Suppose Crump is changing from the equity method rather than to the equity method. How would youranswers to requirements 1 and 2 differ?arrow_forward
- Boulter, Incorporated, began business on January 1, 2024. At the end of December 2024, Boulter had the following investments in debt securities: Trading Available-for-Sale Cost $ 60,000 $ 110,000 Fair value 54,000 107,500 All declines in value are deemed to be temporary in nature. How should the corresponding losses be reflected in the financial statements at December 31, 2024? Income Statement Accumulated Other Comprehensive Income in Shareholders' Equity a. $ 8,500 $ 0 b. $ 0 $ 8,500 c. $ 6,000 $ 2,500 d. $ 2,500 $ 6,000arrow_forwardOn March 31, 2024, Chow Brothers, Incorporated, bought 7% of KT Manufacturing’s capital stock for $51.2 million. KT’s net income for the year ended December 31, 2024, was $80.4 million. The fair value of the shares held by Chow was $35.8 million at December 31, 2024. KT did not declare or pay a dividend during 2024. Required: Prepare all appropriate journal entries related to the investment during 2024. Assume that Chow sold the stock on January 20, 2025, for $30.4 million. Prepare the journal entries to record the sale.arrow_forwardRingmeup Inc. had net income of $151,000 for the year ended December 31, 2019. At the beginning of the year, 36,000 shares of common stock were outstanding. On May 1, an additional 12,000 shares were issued. On December 1, the company purchased 4,500 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend on the 6,000 shares of 4.45%, $100 par value preferred stock that were outstanding the entire year. Required: Calculate basic earnings per share of common stock for the year ended December 31, 2019. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Earnings per sharearrow_forward
- At the beginning of 2021, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?arrow_forwardOn March 31, 2024, Chow Brothers, Incorporated, bought 6% of KT Manufacturing's capital stock for $55.4 million. KT's net income for the year ended December 31, 2024, was $81.8 million. The fair value of the shares held by Chow was $38.6 million at December 31, 2024. KT did not declare or pay a dividend during 2024. Required: 1. Prepare all appropriate journal entries related to the investment during 2024. 2. Assume that Chow sold the stock on January 20, 2025, for $31.8 million. Prepare the journal entries to record the sale. Complete this question by entering your answers in the tabs below. Required 1 Prepare all appropriate journal entries related to the investment during 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). View transaction list Required 2 Journal entry worksheetarrow_forwardAn investor company purchased 17,000 of the 50,000 outstanding shares of the investee company's common stock for $338,000 on January 1, 2021. During 2021, the investee company declared dividends of $33,000 and reported earnings for the year of $158,000. If the investor company uses the equity method of accounting for its investment in the investee company, it should report Dividend Revenue from the investee for 2021 in the amount of $_______. (If there is no Dividend Revenue, then enter 0. Do not round your answer for any part of the computation.)arrow_forward
- Lagro Co. was incorporated on July 1, 2021, with P200,000 from the issuance of stock and borrowed funds of P30,000. During the first year of operations, net income was P10,000. On December 15, Lagro paid an P800 cash dividend. No additional activities affected owners' equity in 2021. At December 31, 2021, Lobo's liabilities had increased to P37,600. In Lagro's December 31, 2021, balance sheet, total assets should be reported at Choices; P239,200. P240,000. P246,800. P276,800.arrow_forwardAt the beginning of 2018, Pioneer Products’ ownership interest in the common stock of LLB Co. increased tothe point that it became appropriate to begin using the equity method of accounting for the investment. Thebalance in the investment account was $44 million at the time of the change but would have been $56 millionif Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change?Would your answer be the same if Pioneer is changing from the equity method rather than to the equitymethod?arrow_forwardRingmeup Inc. had net income of $186,400 for the year ended December 31, 2019. At the beginning of the year, 37,000 shares of common stock were outstanding. On May 1, an additional 10,000 shares were issued. On December 1, the company purchased 4,600 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend on the 8,000 shares of 4.90%, $100 par value preferred stock that were outstanding the entire year.Required:Calculate basic earnings per share of common stock for the year ended December 31, 2019. earnings per sharearrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning