Tutor profile: Denisse G.
What is the difference of stationary and stationery?
Stationery pertained to a seller of a book or a publisher, while as Stationary is an adjective meaning in place and not moving.
On June 1, 2015, XYZ Corporation had 1,000,000 shares of its $50 par value common stock outstanding. One June 2, 2015, XYZ declared a 25% stock dividend to be distributed on July 5, 2015 to shareholders of record on June 15, 2015. The market price per share is $70. What amount of retained earnings should be transferred to contributed capital?
A small stock dividend is a declaration 20% or less of the company's total outstanding shared. Otherwise, it is considered large. If the dividend is a small stock dividend, the value of the shares hall be measured at its market value, otherwise at par. Since the stock dividend is 25%, it shall be considered as a large stock dividend which is to be valued at par. Therefore, the amount of retained earnings to be transferred is $12,500,000 computed by multiplying the number of outstanding share by the percentage stock dividend to get the number of additional shares. [1,000,000 x 25%] = 250,000 Then the adidtional shares shall be multiplied by the amount of par to compute the amount of dividend distributable [25,000 shares x $50 per share] = $12,500,000
XYZ Company bought an equipment during its first year of operations on Jan 1, 2013. The equipment is being depreciated on a straight line basis on a useful life of 5 years with a residual value of $50,000. The Company is contemplating to sell this equipment in order to buy a new one. If the company sell this on December 31, 2016 it will record a loss of $85,000 on a proceeds of $100,000. How much was the recorded cost of the equipment? The company follows a calendar year operations.
First is to use this format: Proceeds: -:less Cost Gain or Loss P 100,000 Cost x Gain/Loss 85,000 100,000 - x = 85,000 x= 185,000 (using algebraic transposition) you now have your cost of $185,000 your remaining useful life is 1 year. Count from January 1,2013 to December 31, 2016, you will have 4 years. Since you have 5 years useful life, you remaining useful life is 1 year, In one year, the 185,000 should be decreased to $50,000 since this is the residual amount after depreciating the equipment for 5 years. So it only means that your annual depreciation is 135,000 = 185,000-50,000 If you have removed 135,000 per year in 4 years.. to depreciate the equipment 135,000 x 5 years (useful life) + 50,000 (residual value) = 725,000 (cost of equipment)
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