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Learning+Team+C_Week+4_CA24-2

Learning+Team+C_Week+4_CA24-2 - Week 4 Learning Team...

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Week 4 Learning Team Assignment Team C Note: Please see excel document for P5-3 CA24-2 Item 1 A 10-year loan agreement, which the company entered into 3 years ago, provides that dividend payments may not exceed net income earned after taxes subsequent to the date of the agreement. The balance of retained earnings at the date of the loan agreement was $420,000. From that date through December 31, 2007, net income after taxes has totaled $570,000 and cash dividends have totaled $320,000. On the basis of these data, the staff auditor assigned to this review concluded that there was no retained earnings restriction at December 31, 2007. Since the company has not finished the terms of their loan agreement, there are still restrictions on the dividend payments. According to FASB, the requirements of the company are to note any dividends in arrears as well as note the requirements that the restrictions prevent cash dividends from exceeding net income. The following should be satisfied: For fiscal years beginning on or after December 15, 2009, if there is a share-lending arrangement involving its own shares in contemplation of a convertible debt offering or other financing, have the required disclosures been made Retained earnings, including appropriations thereof and restrictions on dividends CA24-2 Item 2 Recently Rem interrupted its policy of paying cash dividends quarterly to its stockholders.
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