# Stayman Co. declared a 30% stock dividend. This transaction A) Increases total equity and retained earnings. B) Decreases total equity and retained earnings. C) Has no effect on total equity or retained earnings. D) Has no effect on total equity but decreases retained earnings.

D) Has no effect on total equity but decreases retained earnings.

Explanation:

Dividends refer to the distribution of profits to the common stock holders.

This is basically an appropriation of profits.

When dividends are declared, then the retained earnings are reduced and a liability is created.

Announcing and declaring a dividend is a right to claim dividend by shareholders.

Thus, it do not affect the equity at all, but a liability is created and the moment dividend is paid liability is settled.

## Related Questions

What are 2 branches of classical viewpoint of management

As a result, the classical management theory developed from efforts to find the “one best way” to perform and manage tasks. This school of thought is made up of two branches: classical scientific and classical administrative, described in the following sections.

Saturn ​Motorcycle's selected accounts as of December 31​, 2018​, ​follow: Selling Expenses \$10,400
Interest Revenue 1,900
Net Sales Revenue 130,000
Cost of Goods Sold 81,000

Required:
Prepare the​ multi-step income statement for the year ended December 31​, 2018.

Solution and Explanation:

the following is the income statement for the year ending

Saturn motorcycle's

Income statement

year ending december 31, 2018

Particulars                                                                                    Amount

net sales revenue                                                                        130000

Less: cost of goods sold                                                                81000

gross profit                                                                                  49000

Less: operating expense:

Selling expenses                          10400

Total operating expenses                                                         18900

operating profit                                                                             30100

Non operating revenues ( expenses)

total other revenue                                                                      1900

net income                                                                                   32000

Note: every amount is in dollars

To prepare the multi-step income statement for Saturn Motorcycle for the year ended December 31, 2018, subtract the cost of goods sold from the net sales revenue to get the gross profit. Then, add the selling expenses and administrative expenses to get the operating expenses. Finally, add the operating income and other income to get the net income.

### Explanation:

To prepare the multi-step income statement for Saturn Motorcycle for the year ended December 31, 2018, we need to include key components such as net sales revenue, cost of goods sold, selling expenses, administrative expenses, and interest revenue. Here is the breakdown:

1. Gross Profit: Subtract the cost of goods sold from the net sales revenue. (130,000 - 81,000 = 49,000)
2. Operating Expenses: Add selling expenses and administrative expenses. (10,400 + 8,500 = 18,900)
3. Operating Income: Subtract operating expenses from gross profit. (49,000 - 18,900 = 30,100)
4. Other Income: Include interest revenue. (1,900)
5. Net Income: Add operating income and other income. (30,100 + 1,900 = 32,000)

The multi-step income statement for Saturn Motorcycle for the year ended December 31, 2018 is as follows:

Saturn Motorcycle Income Statement

Net Sales Revenue\$130,000Cost of Goods Sold\$81,000Gross Profit\$49,000Operating Expenses\$18,900Operating Income\$30,100Other Income\$1,900Net Income\$32,000

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Equivalent Units of Conversion Costs The Filling Department of Eve Cosmetics Company had 4,000 ounces in beginning work in process inventory (60% complete). During the period, 46,000 ounces were completed. The ending work in process inventory was 8,000 ounces (25% complete).What are the total equivalent units for conversion costs? If required, round to the nearest unit.

The total equivalent units for conversion cost = 45,600 ounces

Explanation:

Let us arrange the information in a tabular form to help in solution:

% conversion    equivalent units

Particulars                              whole units       completed      for conversion

Beginning inventory in process      4,000                  40%                    1,600

started and completed in period  42,000**               100%                42,000

completed . . . . . . . . . . . . . . . . . .    46,000                                           43,600

ending inventory in process . . . .    8,000                   25%                   2,000

Total units to be assigned cost    54,000                                           45,600

Therefore, the total equivalent units for conversion cost = 45,600 ounces

**Note the inventory that was started and completed within the period is the inventory that was 100% completed within the period and it is the difference between the total inventory completed within the period and the beginning inventory, and this is represented as:

46,000 - 4,000 = 42,000 ounces.

The planning session had been long but productive. Sean had been quiet throughout the meeting. He spent his time texting messages to his son on his cell phone instead. The director finished by summarizing the plan to reschedule stock offerings. Everyone was preparing to leave when Sean raised his hand. "I don’t know if we covered this," he said, "but have we talked about rescheduling the stock offerings yet? I don’t think we should wait until the fall."

Explanation:

In this case, Sean committed an unprofessional attitude towards the meeting.

Work meetings are essential for the employees of an organization to develop a positive interpersonal relationship through communication and the possibility of integration and contribution to the goals of the company through ideas and points of view.

Therefore, it is essential that each employee has a professional position, avoid using the phone during sessions and see meetings as an opportunity to improve their communication and integration skills with other employees.

It is also important that the employee is involved and engaged to actively participate in the meeting.

Scott Confectionery sells its Stack-o-Choc candy bar for \$0.60. The variable cost per unit for the candy bar is \$0.34; total fixed costs are \$171,000.a. What is the contribution margin per unit for the Stack -O- Choc candy bar?

b. What is the contribution margin ratio for the Stack -O-Choc candy bar?

C. What is the breakdown point in units? In sales dollars?

D. If an increase in chocalate prices causes the variable cost per unit to increase to \$0.55, what will happen to the breakeven point?

(i) \$0.26

(ii) 43.33%

(iii) 657,692.31 units

(iv) 3,420,000

Explanation:

Given that,

Selling price = \$0.60

Variable cost per unit = \$0.34

Total fixed costs = \$171,000

(i) contribution margin per unit = Selling price - Variable cost per unit

= \$0.60 - \$0.34

= \$0.26

(ii) contribution margin ratio:

= (contribution margin ÷ Selling price) × 100

= (\$0.26 ÷ \$0.6) × 100

= 43.33%

(iii) Break-even point in units:

= Total Fixed cost ÷ contribution margin

= (171,000 ÷  0.26)

= 657,692.31 units

(iv) If an increase in chocolate prices causes the variable cost per unit to increase to \$0.55.

contribution margin per unit = Selling price - Variable cost per unit

= \$0.60 - \$0.55

= \$0.05

New Break-even point in units:

= Total Fixed cost ÷ contribution margin

= (171,000 ÷  0.05)

= 3,420,000 units

Therefore, there is an increase in the break-even units or more units have to be sold to cover the variable and fixed cost.

a. The contribution margin per unit for Stack-O-Choc candy bars is \$0.26.

b. The contribution margin ratio is approximately 43.33%.

c. The breakdown point is approximately 657,692 units or \$394,615.38 in sales dollars.

d. If the variable cost per unit increases to \$0.55, the new breakeven point will be 3,420,000 units, indicating a higher breakeven level.

a. The contribution margin per unit for the Stack-O-Choc candy bar can be calculated as follows:

Contribution Margin per Unit = Selling Price per Unit - Variable Cost per Unit Contribution Margin per Unit = \$0.60 - \$0.34 = \$0.26

b. The contribution margin ratio (CM ratio) is the contribution margin per unit divided by the selling price per unit, expressed as a percentage:

CM Ratio = (Contribution Margin per Unit / Selling Price per Unit) x 100%

CM Ratio = (\$0.26 / \$0.60) x 100% ≈ 43.33%

c. The breakdown point in units can be calculated using the following formula:

Breakdown Point in Units = Total Fixed Costs / Contribution Margin per Unit Breakdown Point in Units = \$171,000 / \$0.26 ≈ 657,692 units

To find the breakdown point in sales dollars, you can multiply the breakdown point in units by the selling price per unit:

Breakdown Point in Sales Dollars = Breakdown Point in Units x Selling Price per Unit

Breakdown Point in Sales Dollars = 657,692 units x \$0.60 ≈ \$394,615.38

d. If the variable cost per unit increases to \$0.55 due to higher chocolate prices, you can calculate the new breakeven point using the updated variable cost:

New Breakdown Point in Units = Total Fixed Costs / Updated Contribution Margin per Unit

New Breakdown Point in Units = \$171,000 / (\$0.60 - \$0.55) = \$171,000 / \$0.05 = 3,420,000 units

So, if the variable cost per unit increases to \$0.55, the new breakeven point in units will be 3,420,000 units. This increase in variable cost will result in a higher breakeven point.

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The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Balance Sheet (Millions of \$)
Assets 2016
Cash and securities \$2,145
Accounts receivable 8,970
Inventories 12,480
Total current assets \$23,595
Net plant and equipment \$15,405
Total assets \$39,000
Liabilities and Equity Accounts payable \$7,410
Accruals 4,290
Notes payable 5,460
Total current liabilities \$17,160
Long-term bonds \$7,800
Total liabilities \$24,960
Common stock \$5,460
Retained earnings 8,580
Total common equity \$14,040
Total liabilities and equity \$39,000
Income Statement (Millions of \$) 2016
Net sales \$58,500
Operating costs except depreciation 54,698
Depreciation 1,024
Earnings before interest and taxes (EBIT) \$2,779
Less interest 829
Earnings before taxes (EBT) \$1,950
Taxes 683
Net income \$1,268
Other data: Shares outstanding (millions) 500.00
Common dividends (millions of \$) \$443.63
Int rate on notes payable & L-T bonds 6.25%Federal plus state income tax rate 35%Year-end stock price \$23.77A. What is the firm's current ratio?B. What is the firm's quick ratio?C. What is the firm's days sales outstanding? Assume a 365-day year for this calculation.D. What is the firm's total assets turnover?E. What is the firm's inventory turnover ratio?F. What is the firm's TIE?G. What is the firm's debt/assets ratio?H. What is the firm's ROA?I. What is the firm's ROE?

A. 1.375

B. 0.648

C. 77.87 days

D. 1.5 times

E. 4.69 times

F. 3.35 times

G. 34 %

H. 4.63 %

I.  23.22%

Explanation:

A. What is the firm's current ratio

current ratio = current assets / current liabilities

= \$23,595 / \$17,160

= 1.375

B. What is the firm's quick ratio

quick ratio   = (current assets - inventory) / current liabilities

= (\$23,595 - \$12,480) / \$17,160

= 0.648

C. What is the firm's days sales outstanding Assume a 365-day year for this calculation.

days sales outstanding = Inventory / (Sales / 365)

= \$12,480 / (\$58,500 /365)

= 77.87 days

D. What is the firm's total assets turnover

total assets turnover = Sales / Total Assets

= \$58,500 / \$39,000

= 1.5 times

E. What is the firm's inventory turnover ratio?

inventory turnover ratio = Sales / Inventory

= \$58,500 / \$12,480

= 4.69 times

F. What is the firm's TIE?

Total Interest Expense (TIE) = Earnings before interest and taxes (EBIT) / Total Interest Expense

= \$2,779 / \$829

= 3.35 times

G. What is the firm's debt/assets ratio?

debt/assets ratio = Total Debt / Total Assets × 100

= (\$5,460 + \$ \$7,800) / \$39,000 × 100

= 34 %

H. What is the firm's ROA?

Return on Assets (ROA) = Earnings Before Interest After Tax (EBIAT) / Total Assets × 100

= (\$1,268 + (\$829 × 65%)) / \$39,000 × 100

= 4.63 %

I. What is the firm's ROE?

Return on Equity (ROE) = Net Income / Total Shareholders Funds

= \$1,268 / \$5,460 × 100

= 23.22%

The current ratio is 1.37, the quick ratio is 0.65, and the days sales outstanding is 56.15.

### Explanation:

A. The current ratio is calculated by dividing total current assets by total current liabilities:
Current Ratio = Total Current Assets / Total Current Liabilities
Current Ratio = \$23,595 / \$17,160
Current Ratio = 1.37

B. The quick ratio, also known as the acid-test ratio, is calculated by dividing quick assets by total current liabilities:
Quick Ratio = (Cash and Securities + Accounts Receivable) / Total Current Liabilities
Quick Ratio = (\$2,145 + \$8,970) / \$17,160
Quick Ratio = 0.65

C. The days sales outstanding measures how long it takes for a company to collect its accounts receivable:
Days Sales Outstanding = Accounts Receivable / (Net Sales / 365)
Days Sales Outstanding = \$8,970 / (\$58,500 / 365)
Days Sales Outstanding = 56.15