Daisy,Inc ,Has Taxable Income of $850,000 During 2012,its First Year

question 115

Essay

Daisy,Inc. ,has taxable income of $850,000 during 2012,its first year of operations.Daisy distributes dividends of $200,000 to its 10 shareholders (i.e. ,$20,000 each).Daisy earmarks $361,000 of its earnings for potential future expansion into other cities.

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Definitions:

Debt Investments

Investments made by purchasing debt instruments, such as bonds, where the investor becomes a creditor to the issuer.

Journal Entries

Recorded transactions in the accounting journal that show the financial activities of a company.

Marketable

Describes assets or securities that can easily be sold or converted into cash without a significant loss in value.

Cash Dividend

A payout from the company's profits, determined by the board of directors, given to certain shareholders as cash.