Accounting Unit 7 Discussion

Ethics in financial reporting is critical to the reliability of financial statements. Corporate Managers are under enormous pressure to provide high earnings and dividend amounts. After reading the Ethics Case on page 664 of your text discuss the following:

1. Who are the stakeholders in this situation?
2. Is there anything unethical about Henson’s intentions or actions?
3. What is the effect of a stock dividend on a corporation’s stockholders’ equity accounts? Which would you rather receive as a stockholder — a cash dividend or a stock dividend? Why?
4. This is page 664

Critical Thinking

Decision Making Across the OrganizationBYP14-4 The stockholders’ equity accounts of Fernandez, Inc., at January 1, 2012, are as follows.Preferred Stock, no par, 4,000 shares issued$400,000Common Stock, no par, 140,000 shares issued700,000Retained Earnings500,000During 2012, the company had the following transactions and events.July1Declared a $0.50 cash dividend on common stock.Aug.1Discovered a $72,000 overstatement of 2011 depreciation expense. (Ignore income taxes.)Sept.1Paid the cash dividend declared on July 1.Dec.1Declared a 10% stock dividend on common stock when the market value of the stock was  $12 per share. 15Declared a $9 per share cash dividend on preferred stock, payable January 31, 2013. 31Determined that net income for the year was $320,000.InstructionsWith the class divided into groups, answer the following questions.