howard bowen is a large-scale cotton farmer. the land and machinery he owns has

Question

howard bowen is a large-scale cotton farmer. the land and machinery he owns has a current market vlaue of $4 million. bowen owes his local bank $3 million. last year bowen sold $ 5 million worth of cotton. his variable operating costs were $4.5 million; accounting depreciation was $40,000, although the actual decline in value of bowen's machinery was $60,000 last year. bowen paid himself a salary of $50,000, which is not considered part of his variable operating costs. interest on his bank laon was $40,000. if bowen worked for another farmer or a local manufacturer, his annual income would be about $30,000. bowen can invest any funds that would be derived, if the farm were sold, to earn 10 percent annually. ( ignore taxes.) a. compute bowen's accounting profits

Explanation / Answer

. Bowen Corporation had 21,000 shares of common stock outstanding from January 1 to April 1 and 41,000 shares from April 1 to December 31. What is the weighted-average number of shares used for earnings per share calculations? 21,000 x 3/12 = 5,250 41,000 x 9/12 = 30,750 30,750 + 5,250 = a. 36,000 2. Colfax Corporation had a Retained Earnings balance on January 1, 20x7, of $720,000; declared cash dividends during 20x7 in the amount of $106,000, of which $30,000 were not paid until 20x8; and reported an ending balance of Retained Earnings of $1,020,000. Based on these facts alone, net income for 20x7 for Colfax Corporation must have been Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings 720,000 + Net Income - 106,000 = 1,020,000 Net Income = c. $406,000. *Note: It doesn't matter when the dividends were paid, it only matters when they were declared. 3) I'm not sure about

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