1. Linda Trip purchased 1,000 shares

1.
Linda Trip purchased 1,000 shares of Waterhouse
Inc. stock for $20.00 per share. The company subsequently fell on hard times
and declared bankruptcy. The company now
owes its creditors $2,000,000. If there
are 100,000 shares of common stock outstanding, what is Linda’s liability?

2.
Refer to problem one and determine the
percentage of Waterhouse stock that Linda owns

3.
Refer to problem one and assume Waterhouse is a
partnership and Linda is a 20 percent owner.
Determine her liability if the company went bankrupt and owed creditors
$2,000,000.

4.
New Corp. had pretax earnings from operations of
$150,000. In addition, it had interest
income of $20,000 and received a dividend of $80,000. New Corp. is eligible for the 70 percent
intercorporate dividend exclusion. Using
the corporate tax tables, determine New Corp.’s total federal tax liability

5
Old Corp. had earnings before taxes (EBT) of
$500,000. This amount includes$100,000 of dividend income
from another corporation. Old Corp. is
eligible for the 70 percent intercorporate dividend exclusion. Using the
corporate tax tables, determine the following:

a.
Old Corp.’s federal tax liability.
b.
Old Corp.’s earnings after taxes.
c.
Old Corp.’s marginal tax rate.

6 .DDD Corp. had earnings
before interest and taxes (EBIT) of $200,000.
It had interest expense of $40,000
and paid a preferred stock dividend of $30,000.
Using the corporate tax tables, determine the following:

a. DDD’s federal tax liability.
b. DDD’s earnings available to its common
shareholders.
7. ABD Corp. had
pretax earnings from operations of $200,000.
In addition, it had interest income of $50,000 and received a dividend
of $80,000. ABD is eligible for the 70
percent intercorporate dividend exclusion.
Using the corporate tax tables, determine the following:

a. ABD’s
total federal tax liability.
b. ABD’s
marginal tax rate.

8. At the start of
the year XYZ’s common stock was selling at $36.75. By February 27 the price had increased 23
percent. Determine the price on February
27.

9 At the start of the year XYZ’s common stock
was selling at $50 a share. By June 30
the price had increased by 15 percent.
Then, the market value of the stock decreased from its value on June 30
and, by the end of the year, XYZ’s stock was 25 percent less than its value on
June 30. Determine the price of XYZ’s stock at year end

.