Mamx Corporation Case Study

3194 Words 13 Pages
Register to read the introduction… A company declared a cash dividend on its common stock on December 15, year 1, payable on January 12, year 2. How would this dividend affect stockholders’ equity on the following dates? December 15, Year 1 December 31, Year 1 January 12, Year 2
a. Decrease No effect Decrease
b. Decrease No effect No effect
c. No effect Decrease No effect
d. No effect No effect Decrease 7. At December 31, year 2 and year 1, Gow Corp. had 100,000 shares of common stock and 10,000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in year 2 or year 1. Net income for year 2 was $1,000,000. For year 2, basic earnings per share amounted to
10. $10.00
11. $ 9.50
12. $ 9.00
13. $ 8.50 8. Cox Corporation had 1,200,000 shares of common stock outstanding on January 1 and December 31, year 2. In connection with the acquisition of a subsidiary company in June year 1, Cox is required to issue 50,000 additional shares of its common stock on July 1, year 3, to the former owners of the subsidiary. Cox paid $200,000 in preferred stock dividends in year 2, and reported net income of $3,400,000 for the year. Cox’s diluted earnings per share for year 2 should be
2.
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A company sells inventory costing $15,000 to a customer for $20,000. Because of significant uncertainties surrounding the transaction, the installment sales method is viewed as proper. In the first year, the company collects $5,700. In the second year, the company collects another $8,000. What amount of profit should the company recognize in the second year?
1. $2,000
2. $3,000
3. $4,000
4. $5,000 12. A company sends 10,000 units of its products to one of its customers on December 28, Year One. The customer has a right to return any of this merchandise within 6 months for a full refund. The company wants to record this transaction as a sale in Year One. Which of the following is most likely to necessitate that the recording of the transaction as a sale be delayed until Year Two?
1. The company can make a reasonable estimation that 25 percent of the units will be returned.
2. Return of the goods is not contingent on resale.
3. If the goods are stolen from the customer, the obligation is not affected.
4. The company cannot make a reasonable estimation of the number of units that will be returned. 13. In a statement of cash flows, if used equipment is sold at a gain, the amount shown as a cash inflow from investing activities equals the carrying amount of the

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