Homework Answers
Cost of land =
Particulars Amt in $
Acquisition of land 23,000
Survey and legal fees 1,300
Land clearing 300
Total 24,600
The correct answer is option A. i.e. $24600.
Ending retained earnings =
Wyler Inc.
Statement of retained earnings
Year endes 31st ,December, 2018
Particulars Amt in $
Beginning retained earnings 130,000
Add Net income 80,000
210,000
Less Dividends paid 90,000
Ending retained earnings 120,000
(31st, December, 2018)
DEPRECIATION =
Given , Cost =$25,000 useful life = 3 years residual value =$1,500
Depreciation =(cost - salvage value)/useful life
=$(25,000 - 1,500)/3 =$7,833.33333333
Asset is used for 4 months from 31st August, 2017 to 31 st December, 2017
So, depreciation
= 7,833.33333333 ×4/12 = $2,611
RATE OF RETURN ON COMMON STOCKHOLDER'S EQUITY =(Net income - preferred dividend)/Average common stockholder's equity
=(20,440 - 11,200)/84,000
=9,240/84,000
=0.11
=11%
The correct answer is option D. i.e. 11%
SUMMARY (ANSWER)
COST OF LAND = $24,600
ENDING RETAINED EARNINGS(on 31st, December, 2018) =$ 120,000
DEPRECIATION =$2,611
RATE OF RETURN ON COMMON STOCKHOLDER'S EQUITY =11%
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