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Determine the income

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Question - Examine the following document:

Revenues $ 1,000,000

Operating Expenses

- Cost of goods sold $ 400,000

- Depreciation 100,000

- Salaries and wages 200,000

Bond interest (8% debentures sold at maturity value of $1,000,000) 80,000

Dividends declared on 6% preferred stock (par value $500,000) 30,000

Dividends declared of $5 per share on common stock (20,000 shares outstanding) 100,000

Determine the income under each of the following equity theories:

Proprietary theory

Entity theory (orthodox view)

Entity theory (unorthodox view)

Residual theory

Would any of your answers change if the preferred stock is convertible at any time at the ratio of 2 preferred shares for 1 share of common stock?

Reference no: EM131766019

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