Ch14 - 14 Corporations: Dividends, Retained Earnings, and...

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606 Chapter 14 Corporations: Dividends, Retained Earnings, and Income Reporting Scan Study Objectives a Read Feature Story a Read Preview a Read text and answer p. 612 a p. 615 a p. 619 a p. 623 a Work Comprehensive p. 625 a Review Summary of Study Objectives a Answer Self-Study Questions a Complete Assignments a After studying this chapter, you should be able to: 1 Prepare the entries for cash dividends and stock dividends. 2 Identify the items reported in a retained earnings statement. 3 Prepare and analyze a comprehensive stockholders’ equity section. 4 Describe the form and content of corporation income statements. 5 Compute earnings per share. The Navigator STUDY OBJECTIVES A The Navigator A Feature Story OWNING A PIECE OF THE ACTION Van Meter Industrial, Inc. , an electrical-parts distributor in Cedar Rapids, Iowa, is 100% employee-owned. For many years the company has issued bonuses in the form of shares of company stock to all of its employees. These bonus distributions typically have a value equal to several weeks of pay. Top management always thought that this was a great program. There- fore, it came as quite a surprise a few years ago when an employee stood up at a company-wide meeting and said that he did not see any real value DO IT! DO IT! PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
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607 in receiving the company’s shares. Instead, he wanted “a few hundred extra bucks for beer and cigarettes.” As it turned out, many of the company’s 340 employ- ees felt this way. Rather than end the stock bonus program, however, the com- pany decided to educate its employees on the value of share ownership. The employees now are taught how to determine the worth of their shares, the rights that come with share ownership, and what they can do to help increase the value of those shares. As part of the education program, management developed a slogan, “Work ten, get five free.” The idea is that after working 10 years, an employee’s shares would be worth the equivalent of about five years’ worth of salary. For example, a person earning a $30,000 salary would earn $300,000 in wages over a 10-year period. During that same 10-year period it was likely that the value of the employee’s shares would accumulate to about $150,000 (five years’ worth of salary). This demonstrates in more concrete terms why employees should be excited about share ownership. A 12-member employee committee has the responsibility of educating new employees about the program. The committee also runs training programs so that employees understand how their cost-saving actions improve the company’s results—and its stock price. It appears that the company’s educa- tion program to encourage employees to act like owners is working. Prof- itability has increased rapidly, and employee turnover has fallen from 18% to 8%. Given Van Meter’s success, many of the 10,000 other employee-owned companies in the United States might want to investigate whether their employees understand the benefits of share ownership.
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This note was uploaded on 01/30/2011 for the course ACT 240 taught by Professor Janson during the Summer '08 term at N. Michigan.

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Ch14 - 14 Corporations: Dividends, Retained Earnings, and...

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