Problem One
The financial statements for a company included the following information:
|
Common Stock
|
$1,750,000
|
|
Retained Earnings
|
$950,000
|
|
Net Income
|
$1,250,000
|
|
Shares Issues
|
110,000
|
|
Shares Outstanding
|
90,000
|
|
Dividends Declared and Paid
|
$900,000
|
The common stock was sold at a price of $30 per share.
Complete the following:
(a) What is the amount of capital in excess of par?
(b) What was the amount of retained earnings at the beginning of the year?
(c) How many shares are in treasury stock?
(d) Compute earnings per share.
Problem Two
Suppose a company had the following stock outstanding and retained earnings on December 31, 2011.
|
Common Stock (par $7; outstanding, 22,000 shares)
|
$154,000
|
|
Preferred Stock, 10% (par $10; outstanding, 6,000 shares)
|
$60,000
|
|
Retained Earnings
|
$179,000
|
Suppose that the preferred stock is noncumulative, and the total amount of dividends is $29,000.
Compute the amounts of dividends, in total and per share, that would be payable to each class of stockholders.
Problem Three
At December 31st, 2011, the records at a corporation provided the following selected and incomplete data:
|
Common stock (par $1; no changes during the year)
|
|
|
Shares authorized, 3,000,000
|
|
|
|
|
Shares issued, issue price $65 per share
|
|
|
|
Shares held as treasury stock, 85,000 shares, cost $40 per share
|
|
Net income, $3,700,000
|
|
|
|
|
|
Common stock account, $1,400,000
|
|
|
|
|
Dividends declared and paid; $2 per share.
|
|
|
|
Retained Earnings balance, January 1, 2011, $74,700,000
|
|
|
|
|
|
|
Find the following:
(a) the shares issued
(b) the shared outstanding
(c) the balance in the Capital in Excess of par account
(d) the EPS on net income
(e) The total dividends paid on common stock during 2011
(f) The amount of treasury stock
Problem 4
On August 31, 2010, a company purchased 10,000 shares of stock for $30 per share. Management recorded the stock in the securities available for the sale portfolio. The following information pertains to the price per share of stock:
|
|
Price
|
|
12/31/2010
|
$35
|
|
12/31/2011
|
$34
|
|
12/31/2012
|
$37
|
Prepare journal entries for the investments in SAS and the Net Realized losses/gains for each date given. Then compute the balance in the Net Unrealized Losses/Gains.
Question-
Survivor Company was formed on January 1, 2008 by selling and issuing 20,000 shares of common stock at $15 per share. On December 1, 2009, the company declared a cash dividend of $10,000 which will be paid in cash on January 15, 2010. The annual accounting period ends December 31. A. Give the journal entry to record the sale and issuance of the common stock on January 1, 2008, for each of the following independent assumptions: The common stock has a par value of $10 per share. The common stock was no par with a stated value of $5 per share. The common stock was no par and no stated value. B. Give the journal entry to record the dividend declaration on December 1, 2009. C. Show the journal entry to record payment of the dividend on January 15, 2010.
Question-
Sources of Financing (support your answer by putting a link for the article)
This article http://www.econlib.org/library/Enc/CorporateFinancialStructure.html (copy and paste this link on the net page to get it) considers corporate financial structures and companies' use of debt or equity to finance growth. Some well-known companies, including Apple, Amazon and Bed, Bath and Beyond, choose not to use any debt financing while others have high debt-to-equity ratios.In your opinion, what are the most important factors managers should consider to determine whether debt or equity is the most appropriate financing option? Answering from the perspective of a shareholder, would you want a company to use debt for growth? Why or why not?