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ISBN: 9781308821672

Author: Libby

Publisher: MCG/CREATE

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Chapter 11, Problem 11.7ME

Determining the Amount of a Dividend

Cole Company has 288,000 shares of common stock authorized, 260,000 shares issued, and 60,000 shares of treasury stock. The company’s board of directors has declared a dividend of 65 cents per share. What is the total amount of the dividend that will be paid?

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Chapter 11, Problem 11.6ME

Chapter 11, Problem 11.8ME

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

Chapter 11 Solutions

FINANCIAL ACCOUNTING 9TH

Ch. 11 - Prob. 1Q Ch. 11 - Prob. 2Q Ch. 11 - Explain each of the following terms: (a)...Ch. 11 - Differentiate between common stock and preferred...Ch. 11 - Explain the distinction between par value and...Ch. 11 - Define additional paid-in capital.Ch. 11 - Prob. 7Q Ch. 11 - Define treasury stock. Why do corporations acquire...Ch. 11 - How is treasury stock reported on the balance...Ch. 11 - What are the two basic requirements to support the...

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Determining the Amount of a Dividend Cole Company has 288,000 shares of common stock authorized, 260,000 shares issued, and 60,000 shares of treasury stock . The company’s board of directors has declared a dividend of 65 cents per share. What is the total amount of the dividend that will be paid?

Solution Summary: The author explains that dividends are the rewards to stockholders for investing their money in the company. Payment of dividend depends upon the decision of the management.

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Chapter 11 Solutions