Question

Bachman Company plans to develop a shopping center. In the first quarter, the following amounts were spent Acquisition of lan
Wyler, Inc. had beginning retained earnings of 130,000 on January 1, 2016. During the year. Wyter declared and paid $90,000 o

On August 31, 2017. Concord Pet Care Cleo purchased ac machine for $25.000. Concord Pet Care Chic expect the machine to test
Brooke Corporation has the following data: Net income $ 20.440 Preferred dividends 11.200 Average common stockholders equity
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Answer #1

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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