Roosevelt Inc., a consulting service, has a history of paying annual dividends of $1 per share. Management
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All sales are on account, and accounts receivable are collected one month after the sale. Sales volume has been decreasing 5% each month.
Operating expenses are paid in cash in the month incurred. Average monthly expenses are $10,000 (excluding the biweekly payroll).
Biweekly payroll is $4,500, and it will be paid December 15 and December 31.
Unearned revenue is expected to be earned in December. This amount was taken into consideration in the expected sales volume.
Required
Determine the cash that Roosevelt will have available to pay a dividend on December 31, 2011. Round all amounts to the nearest dollar. Should management recommend that the board of directors declare a dividend? Explain.
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
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