Alternative Dividend Policies

Boehm Corporation has had stable earnings growth of 7% a year for the past 10 years, and in 2019 Boehm paid dividends of $2 million on net income of $5 million. However, net income is expected to grow by 30% in 2020, and Boehm plans to invest $3.5 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2020 Boehm will return to its previous 7% earnings growth rate. Its target debt ratio is 33%. Boehm has 1 million shares of stock.

1. Calculate Boehm's dividend per share for 2020 under each of the following policies:
   1. Its 2020 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest cent.

      $  

   2. It continues the 2019 dividend payout ratio. Round your answer to the nearest cent.

      $  

   3. It uses a pure residual policy with all distributions in the form of dividends (33% of the $3.5 million investment is financed with debt). Round your answer to the nearest cent.

      $  

   4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy. What will the extra dividend be? Round your answer to the nearest cent.

      $  

The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets Cash $120,000 Accounts receivable 300,000 Inventory 200,000 Furniture and fixtures (net)  150,000 Total assets $770,000 Liabilities and Shareholders’ Equity Accounts payable (for merchandise) $190,000 Notes payable 200,000 Interest payable 6,000 Common stock 100,000 Retained earnings  274,000 Total liabilities and shareholders’ equity $770,000 Transactions during 2021 (current year) were as follows: 1. Sales to customers on account $800,000 2. Cash collected from customers 780,000 3. Purchase of merchandise on account 550,000 4. Cash payment to suppliers 560,000 5. Cost of merchandise sold 500,000 6. Cash paid for operating expenses 160,000 7. Cash paid for interest on notes 12,000 Additional Information: The notes payable are dated June 30, 2020, and are due on June 30, 2022. Interest at 6% is payable annually on June 30. Depreciation on the furniture and fixtures for 2021 is $20,000. The furniture and fixtures originally cost $300,000.

Required: Prepare a classified balance sheet at December 31, 2021, by updating ending balances from 2020 for transactions during 2021 and the additional information. The cost of furniture and fixtures and their accumulated depreciation are shown separately.

Problem 16-4 Change in tax rate; record taxes for four years [LO16-1, 16-5]

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2018 through 2021 except for differences in depreciation on an operational asset. The asset cost $130,000 and is depreciated for income tax purposes in the following amounts:

2018	$	42,900
2019		57,200
2020		19,500
2021		10,400

  
The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.
  
Income amounts before depreciation expense and income taxes for each of the four years were as follows.
   

	2018			2019			2020			2021
Accounting income before taxes and depreciation	$	75,000		$	95,000		$	85,000		$	85,000

  
Assume the average and marginal income tax rate for 2018 and 2019 was 30%; however, during 2019 tax legislation was passed to raise the tax rate to 40% beginning in 2020. The 40% rate remained in effect through the years 2020 and 2021. Both the accounting and income tax periods end December 31.
   
Required:
Prepare the journal entries to record income taxes for the years 2018 through 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Parasaurolophus was a dinosaur whose distinguishing feature was a hollow crest on the head. The 1.4 m long hollow tube in the crest had connections to the nose and throat, leading some investigators to hypothesize that the tube was a resonant chamber for vocalization

If you model the tube as an open-closed system, what are the first three resonant frequencies? (Use 350 m/s for the speed of sound.)

Enter your answers using two significant figures in ascending order separated by commas.
f = _______Hz, ________Hz, ________Hz

A 140-mH inductor and a 4.80-Ω resistor are connected with a switch to a 6.00-V battery as shown in the figure above.

(a) After the switch is first thrown to a (connecting the battery), what time interval elapses before the current reaches 220 mA?
ms

(b) What is the current in the inductor 10.0 s after the switch is closed?
A

(c) Now the switch is quickly thrown from a to b. What time interval elapses before the current in the inductor falls to 160 mA?
ms

When a sound wave travels directly toward a hard wall, the incoming and reflected waves can combine to produce a standing wave. There is an antinode right at the wall, just as at the end of a closed tube, so the sound near the wall is loud. You are standing beside a brick wall listening to a 80Hz tone from a distant loudspeaker.

How far from the wall must you move to find the first quiet spot? Assume a sound speed of 340 m/s.

On March 1, the price of a commodity is $1,000, and the December futures price is $1,015. On November 1, the price is $980, and the December futures price is $981. A producer of the commodity entered into a December futures contracts on March 1 to hedge the sale of the commodity on November 1. The producer closed out its position on November 1. The effective price realized is therefore ___________. $1015-$981 or $34 $981+15 or $996 $1015 -1000 or $15 $980+15 or $995 $981+$34 or $1015 $980+$34 or $1014

On 12/31/24, the Cheboygan Company paid $4,000 of prepaid insurance and expensed the entire amount. The policy covered the period 1/1/25 to 12/31/29.

The error was discovered on 1/10/28; the 2027 books are closed. The correcting journal entry will include what entry to 1/1/28 Retained Earnings?

Select one:

a. $1,600 debit

b. $2,400 debit

c. $2,400 credit

d. No journal entry needed

e. $1,600 credit

Match each of the following transactions to the journal in which it would be entered.

Rendered services on account
Received payment from customer on account
Received cash from the bank in exchange for a note payable
Purchased supplies on account
Paid vendor on account
Withdrew cash for personal use (by owner)
Withdrew supplies from the business for personal use (by owner)
Journalized the adjusting entry for supplies used during the period
Recognized depreciation on the building
Closed the revenue account at the end of the period

1. Due to the recent reduction in corporate income tax rates, we can expect investment spending to _____ and the equilibrium interest rate to ____, all else the same.

2.People become less confident in the state of the economy. This is likely to cause national saving to _____ and the equilibrium interest rate to _______.

3. When households experience an increase in wealth they will tend to ___ private saving and ____ consumption spending.

4. When the federal government increases the budget deficit, this causes national saving to ____ and the equilibrium interest rate to ____ in a closed economy.