Question

Question 8 1 pts Assuming all amounts involved are material, the occurrence which most likely would have no effect on 2020 net income is the: O sale in 2020 of an office building contributed by a stockholder in 1989 collection in 2020 of a receivable from a customer whose account was written off in 2019 by a charge to the allowance account O settlement based on litigation in 2020 of previously unrecognized damages from a serious accident that occurred in 2018 O worthlessness determined in 2020 of stock purchased on a speculative basis in 2016 Question 9 1 pts In 2020, Cactus Corporation reported net income of $600,000. It declared and paid preferred stock dividends of $150,000 and common stock dividends of $60,000. During 2020, Cactus had a weighted average of 300,000 common shares outstanding. Compute Cactus's 2020 earnings per share. $1.30 O $1.50 OOO $2.00 $2.50

Answer 1

8

The occurrence which most likely would have no effect on 2020 net income is collection in 2020 of a receivable from a customer whose account was written off in 2019 by a charge to the allowance account.

The recovery of account written off under allowance method has no effect on net income.

Option B is correct

9
Net income	600000
Less: Preferred Dividends	150000
Net income for common stockholders	450000
Divide by Weighted average common shares outstanding	300000
Earnings per share	1.50
Option B $1.50 is correct