Question
14.5 The shareholders equity accounts for Erle Enterprises Inc. at the beginning of the year were as follows: During the year the following transactions/events took
14.5 The shareholders equity accounts for Erle Enterprises Inc. at the beginning of the year were as follows: During the year the following transactions/events took place: 1. A 2-for-1 preferred stock split; market price was $30 2. Declared a 10% stock dividend to common shareholders; fair value was $1.20 3. Profit before tax was $200,000 4. Other comprehensive income net of tax was $20,000 5. Inventory was debited $20,000 to correct a previous period error The tax rate for Erle Enterprises is 30%. What would be the shareholders equity balance at the end of the year?
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A :
$1,917,000
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B :
$1,815,000
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C :
$1,875,000
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D :
$1,809,000
_______________________
14.3 Zoro Products sold its Eastern Division at a loss of $1,000,000. Zoros tax rate is 25%. How will this loss be reported in Zoros financial statements?
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A :
As a loss of $662,500, net of $187,500 income tax savings
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B :
As a loss of $1,000,000
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C :
As a loss of $750,000, net of $250,000 income tax savings
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D :
As a loss of $1,250,000, including income tax of $250,000
_______________________
14.2 The following information was taken from the records of Prime Office Supplies Inc. immediately before and after the reacquisition of 10,000 shares. The average price per share before the reacquisition was $25. Assuming no other transactions took place, what would be the balance in the Retained Earnings account after the acquisition?
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A :
$625,000
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B :
$375,000
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C :
$725,000
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D :
$525,0000
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14.2 A corporation paid $8 per share for 9,000 of its own common shares that had originally sold for an average of $5. What will be the effect on total shareholders' equity?
-
decrease of $27,000
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B :
increase of $45,000
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C :
decrease of $45,000
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D :
increase of $27,000
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