Hometown Grocery, Inc, has 48,000 shares of common stock outstanding and 2,000 s
ID: 2437131 • Letter: H
Question
Hometown Grocery, Inc, has 48,000 shares of common stock outstanding and 2,000 shares of preferred stock outstanding. The common stock is $8.00 par value the preferred stock is 6% noncumulative with a $100 00 par value. On October 15, 2018, the company declares a total dividend payment of $44,000 what is the amount of dividend that will be paid for each share of common stock? (Round your answer to the nearest cent.) 0 A $0.67 O B. $1.09 O C. $38.40 OD. S3.84000 Accounts Receivable has a balance of $7,000, and the Allowance for Bad Debts has a credit balance of $400. The allowance method is used. What is the net realizable value of Accounts Receivable after a $160 account receivable is written off OA. $6.760 OB. $6,600 C. $6,440 OD, $7,000 The cost of an asset is $1,020,000, and its residual value is $160,000. Estimated useful life of the asset is five years. Calculate depreciation for the second year using the double-declining-balance method of depreciation. (Do not round any intermediate calculations, and round your final answer to the nearest dollar.) OA. OB? $172.000 $244,800 C. $344,000 OD. $204,000Explanation / Answer
1. Dividend Payment per each share is $0.67
Total Dividend = $48000
Total Preferential Dividednd = No. of Shares * Face Value * 6% = $100 * 2000 * 6% = $12000
Total Equity Dividend = Total Dividend - Total Equity Dividend = $48000 - $12000 = $36000
Dividend Per Each Share = Equity Dividend / Total Equity Shares
Dividend Per Each Share = $36000 / 48000 = $0.67 per share
2. Option B
Net Realizable value of AR = Balance - Write off - Allowance + Write Off
Net Realizable value of AR = $7000 - $160 - $400 + $160 = $6600
3. Option B
DDB Rate = 100% / Useful Life * 2
DDB Rate = 40%
Depreciation in year 1 = $1020000 * 40% = $408000
Depreciation in year 2 = (Cost - Depreciation for year1 )* 40% = $612000 * 40% = $244800
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