Chapter 24: Question BE24-9 (page 1447)
Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are
Short Answer
The expected cost savings for the coming year is $275,000.
Chapter 24: Question BE24-9 (page 1447)
Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are
The expected cost savings for the coming year is $275,000.
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Get started for free(Dividend Policy Analysis) Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through the retention of earnings. A stock or a cash dividend has never been declared. Presented below is a brief financial summary of Matheny Inc.’s operations.
(\(000 omitted) | |||||
2018 | 2017 | 2016 | 2015 | 2014 | |
Sales revenue | \)20,000 | \(16,000 | \)14,000 | \(6,000 | \)4,000 |
Net income | 2,400 | 14,000 | 800 | 700 | 250 |
Average total assets | 22,000 | 19,000 | 11,500 | 4,200 | 3,000 |
Current assets | 8,000 | 6,000 | 3,000 | 1,200 | 1,000 |
Working capital | 3,600 | 3,200 | 1,200 | 500 | 400 |
Common shares: Number of shares Outstanding (000) Average market price | 2,000 \(9 | 2,000 \)6 | 2,000 $4 | 20 - | 20 - |
Instructions
Okay. Last fall, someone with a long memory and an even longer arm reached into that bureau drawer and came out with a moldy cheese sandwich and the equally moldy notion of corporate forecasts. We tried to find out what happened to the cheese sandwich—but, rats!, even recourse to the Freedom of Information Act didn’t help. However, the forecast proposal was dusted off, polished up and found quite serviceable. The SEC, indeed, lost no time in running it up the old flagpole—but no one was very eager to salute. Even after some of the more objectionable features—compulsory corrections and detailed explanations of why the estimates went awry—were peeled off the original proposal.
Seemingly, despite the Commission’s smiles and sweet talk, those craven corporations were still afraid that an honest mistake would lead them down the primrose path to consent decrees and class action suits. To lay to rest such qualms, the Commission last week approved a “Safe Harbor” rule that, providing the forecasts were made on a reasonable basis and in good faith, protected corporations from litigation should the projections prove wide of the mark (as only about 99% are apt to do).
Instructions
Operating profits and losses for the seven industry segments of Foley Corporation are:
Penley $ 90 Cheng 20
Konami 40 Takuhi (34)
KSC (25) Molina 150
Red Moon 50
Based only on the operating profit (loss) test, which industry segments are reportable?
The following information was described in a note of Canon Packing Co.
“During August, Holland Products Corporation purchased 311,003 shares of the Company’s common stock which constitutes approximately 35% of the stock outstanding. Holland has since obtained representation on the Board of Directors.”
“An affiliate of Holland Products Corporation acts as a food broker for Canon Packing in the greater New York City marketing area. The commissions for such services after August amounted to approximately $20,000.”
Why is this information disclosed?
For each of the following subsequent events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.
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