FI515Week2doc - W2 Student Homework Template Week Two...

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W2 Student Homework Template Week Two Homework Questions, Exercises and Problems Chapter 3: Questions 3-2 and 3-3 Chapter 3: Problems 3-7 and 3-9 Chapter 4: Questions 4-2 and 4-4 Chapter 4: Problems 4-2 and 4-3 Question Answer 3-2 1. Balance Sheet 2. Income Statement 3. Statement of retained earnings 4. Statement of cash flows Question: Answer: 3-3 No. Retained earnings are the cumulative amount of earnings that have not been paid out as dividends. This money is not only allotted for dividends, but may also be used to reinvest toward future growth and expansion. Therefore, simply because 20 million in retained earnings shows up on a balance sheet does not necessarily mean that it would be a wise business decision to use all of that for dividends and not leave a portion for reinvestment. Problem:
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Answer: Taxable Income = Operating Income Before Taxes + 30% Dividends Received – Interest Paid 365,000+ (15,000x.3)-50000 = 319,500 Tax on base = 113,900 Amount over base =-45500
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This note was uploaded on 03/26/2012 for the course F1515 F1515 taught by Professor Stan during the Spring '10 term at Keller Graduate School of Management.

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FI515Week2doc - W2 Student Homework Template Week Two...

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