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    Regulations: Determine the income under each of the following equity theories:

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    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
    Dividentds declared on 6% preferred stock (par value $500,000) 30,000
    Dividentds declared of $5 per share on common stock (20,000 shares outstanding) 100,000
    Based on this information complete the following tasks:
    1. Determine the income under each of the following equity theories:
    o Proprietary theory
    o Entity theory (orthodox view)
    o Entity theory (unorthodox view)
    o Residual theory
    2. 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?

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    Calculation shown for you. I have also provided necessary explanatory notes and calculations where necessary. No references.

    $2.19

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