Identify and briefly describe the two primary sources of shareholders’ equity.

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Answer 1

Textbook Question

Chapter 18, Problem 18.1Q

Identify and briefly describe the two primary sources of shareholders’ equity.

Expert Solution & Answer

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.

Explanation of Solution

The two primary sources of shareholders’ equity is:

1. Paid in capital
2. Retained earnings

Paid in capital:

Paid in capital represents the amount invested by the shareholders of the business in common stock and/or preferred stock.

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

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Perreth Drycleaners has capacity to clean up to 5,000 garments per month. Requirements 1. Complete the schedule below for the three volumes shown. 2. Why does the average cost per garment change? 3. Suppose the owner, Dale Perreth, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 2,000 garments. Would he overestimate or underestimate his total costs? By how much? Requirement 1. Complete the following schedule for the three volumes shown. (Round all unit costs to the nearest cent and all total costs to the nearest whole dollar.) Total variable costs Total fixed costs Total operating costs Variable cost per garment Fixed cost per garment 2,000 Garments 3,500 Garments 5,000 Garments $ 2,800 2.00 Average cost per garment Requirement 2. Why does the average cost per garment change? The average cost per garment changes as volume changes, due to the component of the dry cleaner's costs. The cost per unit decreases as volume , while the variable…

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Answer 2

Textbook Question

Chapter 18, Problem 18.1Q

Identify and briefly describe the two primary sources of shareholders’ equity.

Expert Solution & Answer

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.

Explanation of Solution

The two primary sources of shareholders’ equity is:

1. Paid in capital
2. Retained earnings

Paid in capital:

Paid in capital represents the amount invested by the shareholders of the business in common stock and/or preferred stock.

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

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Answer 3

Textbook Question

Chapter 18, Problem 18.1Q

Identify and briefly describe the two primary sources of shareholders’ equity.

Expert Solution & Answer

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.

Explanation of Solution

The two primary sources of shareholders’ equity is:

1. Paid in capital
2. Retained earnings

Paid in capital:

Paid in capital represents the amount invested by the shareholders of the business in common stock and/or preferred stock.

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

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Answer 4

Textbook Question

Chapter 18, Problem 18.1Q

Identify and briefly describe the two primary sources of shareholders’ equity.

Expert Solution & Answer

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.

Explanation of Solution

The two primary sources of shareholders’ equity is:

1. Paid in capital
2. Retained earnings

Paid in capital:

Paid in capital represents the amount invested by the shareholders of the business in common stock and/or preferred stock.

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.

Explanation of Solution

The two primary sources of shareholders’ equity is:

1. Paid in capital
2. Retained earnings

Paid in capital:

Paid in capital represents the amount invested by the shareholders of the business in common stock and/or preferred stock.

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

Answer 8

Expert Solution & Answer

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.

Explanation of Solution

The two primary sources of shareholders’ equity is:

1. Paid in capital
2. Retained earnings

Paid in capital:

Paid in capital represents the amount invested by the shareholders of the business in common stock and/or preferred stock.

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Shareholders’ equity: Shareholders’equity refers to the right the owner possesses over the resources of the business. In other words, Shareholders’equity refers to the amount of capital that includes the amount of investment by the stockholders, earnings generated from the normal business operations, and less any dividends paid to the stockholders.

To identify and briefly: Define the two primary sources of shareholders’ equity.