Ferman Corporation Had Net Income of $140000 and Paid Dividends

question 164

Multiple Choice

Ferman Corporation had net income of $140000 and paid dividends of $40000 to common stockholders and $20000 to preferred stockholders in 2021.Ferman Corporation's common stockholders' equity at the beginning and end of 2021 was $870000 and $1130000 respectively.Ferman Corporation's payout ratio for 2021 was

• A)4.0%.
• B)42.9%.
• C)28.6%.
• D)14.3%.

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Definitions:

Coverdell Education Savings Account

A tax-advantaged investment account in the United States designed to encourage savings to cover future education expenses.

Beneficiary

An individual or entity designated to receive benefits from an insurance policy, retirement plan, will, or trust after the policyholder's or owner's death.

Nondeductible Contributions

Payments made to certain accounts or plans, such as a traditional IRA, for which the taxpayer cannot take a tax deduction.

Adjusted Basis

The value of an asset for tax purposes, adjusted for factors like depreciation or improvements.