Martinez Corp. began operations in 2014. During the years 2014-2016, it reported net income and declared dividends
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Martinez Corp. began operations in 2014. During the years 2014-2016, it reported net income and declared dividends as follows.
Net income | Dividends declared | |||||
---|---|---|---|---|---|---|
2014 | $27,000 | $ –0– | ||||
2015 | 118,000 | –0– | ||||
2016 | 234,000 | 48,000 |
During 2017, Martinez Corp.:
● | discovered that it had failed, in 2015, to record $44,000 in depreciation on equipment in one of its warehouses. | ||
● | changed, on January 1 ,2017, from the average cost to the FIFO method of accounting for its inventory. If Martinez Corp. had applied the FIFO method to it inventory in prior years, cumulative net income (before tax) would have been $17,000 lower than originally reported. | ||
● | reported income before income tax expense of $520,000. | ||
● | declared and paid dividends to common shareholders of $83,000. |
Martinez’s effective income tax rate for all years was 40%.
Related Book For
Corporate Financial Accounting
ISBN: 978-1133952411
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
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