Checkers Corporation Has a Single Class of Common Stock Outstanding

question 4

Essay

Checkers Corporation has a single class of common stock outstanding. Bert owns 100 shares, which he purchased five years ago for $200,000. In the current year, when the stock is worth $2,500 per share, Checkers Corporation declares a 10% stock dividend payable in common stock. Bert receives ten additional shares on December 10 of the current year. On January 25 of next year he sells all ten shares for $30,000.
a)How much income must Bert recognize when he receives the stock dividend?
b)How much gain or loss must Bert recognize when he sells the ten shares he received as a stock dividend?

Understand the significance and calculation of accounts receivable turnover.

Recognize the accounting treatments for bad debts and the quality of receivables.

Understand and apply the direct write-off method for uncollectible accounts.

Recognize the expense recognition principle as it applies to bad debts and compare the direct write-off and allowance methods.

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Definitions:

Defensive Manoeuvres

Actions or strategies designed to protect oneself or one's group from threats or attacks.

Interpretation

The process of explaining, understanding, or giving meaning to data, texts, actions, or phenomena, usually according to a particular perspective or theory.

Unconscious Conflicts

Internal struggles within an individual that are not within their conscious awareness, often explored in psychoanalytic and psychodynamic theories.

Psychological Disorders

Mental disorders characterized by disturbances in thinking, emotional regulation, or behavior.