197) A company reported $960,000 in net income for the current year. Total weighted-average
common shares outstanding are 150,000 shares, and the year-end market price is $67.20 per
common share. Calculate the company’s price earnings ratio.
198) A company reported $1,050,000 in net income for the current year. Earnings per common
share is $1.75 and the year-end market price of the shares is $31.50. Calculate the company’s
price earnings ratio.
199) A corporation reported net income of $2,730,000 and paid preferred cash dividends of
$120,000 during the current year. There were 600,000 weighted-average shares of common stock
outstanding and the market price per common share at year-end was $58.30. Calculate the
company’s price-earnings ratio.
200) Gershwin Company reported net income of $428,000 and paid $8,500 in preferred cash
dividends during the current year. The company had 110,000 common shares issued, and 10,000
common shares in treasury during the year. The year-end market price per common share was
$41.05. Calculate the company’s price-earnings ratio.
201) A company’s stock is selling for $35.70 per share at year-end. This current year it paid
shareholders a $1.43 per share cash dividend, reported earnings per share of $11.00, and had
750,000 common shares outstanding at year-end. Calculate the company’s dividend yield.
202) A corporation paid a cash dividend of $0.85 per share during the current year. It had
1,550,000 common shares outstanding at year-end, its current year earnings per share was $3.45,
and the stock’s year-end market price was $10.63 per share. Calculate the company’s dividend
yield.
203) Lafferty Corporation reported earnings per share of $9.75, paid a $6.00 cash dividend per
share to preferred shareholders, and paid a $0.54 cash dividend per share to common
shareholders. There were 10,000 shares of preferred stock outstanding and 600,000 shares of
common stock outstanding during the year, and the market price per share of common stock was
$41.60. Calculate the company’s dividend yield for common stock.
204) A company paid a cash dividend of $0.88 per share during the current year, and reported
18,000 shares of common stock issued, and 2,000 common shares in treasury stock during the
current year. The year-end market price per share was $27.50. Calculate the following: (1) total
amount of cash dividends paid to common shareholders, and (2) dividend yield.
205) A company has 2,000,000 common shares authorized, 400,000 common shares issued, and
15,000 common shares in treasury stock at the current year-end. It paid $0.96 per share cash
dividends during the year. The year-end market price of the stock is $15. Calculate (1) the total
dividends paid and (2) the dividend yield.
206) Avro Corporation has $875,000 in stockholders’ equity and 350,000 weighted-average
shares of common stock outstanding. Calculate the book value per common share.
207) A company has $2,400,000 in stockholders’ equity that includes 500 shares of $50 par value
preferred stock outstanding and 250,000 shares of common stock outstanding. Calculate the book
value per (1) preferred share, and (2) common share.
208) A company reports the following stockholders’ equity:
Paid-in Capital:
Common stock, $2 par, 5,000,000 shares authorized
$3,000,000
Paid-in capital in excess of par, Common stock ……
1,300,000
Total paid-in capital …………………………………
$4,300,000
Retained earnings …………………………………
1,400,000
Total stockholders’ equity …………………………
$5,700,000
Compute the (1) number of common shares outstanding and (2) book value per common share.
209) The stockholders’ equity section of a company’s year-end balance sheet follows:
Preferred stock, $50 par value, 9% cumulative and
nonparticipating, 10,000 shares outstanding ……………
$500,000
Paid-in capital in excess of par value, preferred stock
50,000
Total capital paid-in by preferred stockholders …………
$550,000
Common stock, $0.50 par value, 1,500,000 shares
outstanding ………………………………………
$750,000
Paid-in capital in excess of par value, common stock …
150,000
Total capital paid-in by common stockholders …………
900,000
Total paid-in capital ……………………………………
$1,450,000
Retained earnings ………………………………………
1,690,000
Total stockholders’ equity ………………………………
$3,140,000
The preferred stock has one year of dividends in arrears. Calculate the book value per common
share.
Total stockholders’ equity
Less equity applicable to preferred shares:
Par value ($50 * 10,000 shares)
$500,000)
45,000
Equity applicable to common shares
$2,595,000
210) A corporation reports the following year-end stockholders’ equity:
Paid-in capital:
Preferred stock, 8%, 100,000 shares authorized, 50,000 shares
issued ………………….
$ 2,500,000
Common stock, $1 par, 5,000,000 shares
authorized, 4,000,000 shares issued ………………..
4,000,000
Paid-in capital in excess of par, Common …………..
1,325,000
Total paid-in capital ………………………………..
$ 7,825,000
Retained earnings ……………………………………..
10,675,000
Total stockholders’ equity …………………………….
$18,500,000
Determine the following:
(1) Par value for the preferred stock.
(2) Book value per share for common stock
Total stockholders’ equity ………………………
Common stockholders’ equity …………………..
($16,000,000/4,000,000 shares)……………..
211) The stockholders’ equity section of a corporation’s balance sheet follows:
Preferred stock, $25 par value, 6%, cumulative, 10,000 shares
authorized, 5,000 shares issued and outstanding …………..
$125,000
Common stock, $5 par value, 50,000 shares authorized,
20,000 shares issued and outstanding.……………………..
100,000
Paid-in capital in excess of par value, Common stock ………
90,000
Retained earnings ……………………………………….
95,000
Total stockholders’ equity ……………………………….
$410,000
(1) Assuming that no dividends are in arrears, compute the book values per preferred share and
per common share.
(2) Assuming that one year of cumulative preferred dividends is in arrears, compute the book
value per common share.
132,500
212) A company is authorized to issue 750,000 shares of $2 par value common stock. Prepare
journal entries to record the following selected transactions that occurred during the company’s
first year of operations:
Jan. 10
Sold 102,000 shares of common stock for $8 cash per share.
Jan. 15
Exchanged 10,000 shares of common stock for equipment with a market
value of $70,000.
Feb. 1
Exchanged 500 shares of common stock for $3,000 of legal services
incurred during the company’s organization.
Jan. 10
Cash (102,000 * $8) ………….………….…
Feb. 1
213) On July 1, a corporation issued 15,000 shares of no-par common stock with a stated value
of $3 per share in exchange for a tract of land having a market value of $215,000. Prepare the
general journal entry to record this transaction.
214) On September 20, Fletcher Corporation issued 25,000 shares of no-par common stock for
equipment having a market value of $85,000. Prepare the general journal entry to record this
transaction.
215) A corporation had the following stock outstanding when the company’s board of directors
declared a $75,000 cash dividend in the current year:
Preferred stock, $40 par, 6%, 12,500 shares issued
$ 500,000
Common stock, $10 par, 70,000 shares issued …………….
700,000
Total ………………………………………………………..
$1,200,000
Allocate the cash dividend between the preferred and common stockholders assuming the
preferred stock is noncumulative and nonparticipating.
216) A corporation had the following stock outstanding when the company’s board of directors
declared a $55,000 cash dividend during the current year:
Preferred stock, $10 par, 4%, 50,000 shares issued
$ 500,000
Common stock, $1 par, 750,000 shares issued ……..
750,000
Total …………………………………………………
$ 1,250,000
Allocate the cash dividend between the preferred and common stockholders assuming the
preferred stock is cumulative and nonparticipating and dividends are one year in arrears.
217) A company has $200,000 of 10% noncumulative, nonparticipating, preferred stock
outstanding, and $150,000 of common stock outstanding. In the company’s first year of
operation, no dividends were paid, but during the second year, it paid cash dividends of $25,000.
Compute the dividends to be distributed to (1) preferred shares and (2) common shares.
218) A company was organized in January Year 1 and has 20,000 shares of $10 par value, 10%,
nonparticipating preferred stock outstanding and 150,000 shares of $2 par value common stock
outstanding. It has declared and paid cash dividends each year as shown below. Calculate the
total dividends distributed to each class of stockholder under each of the assumptions given.
Assuming Preferred
Assuming Preferred
Stock
Stock
Cash
Is Noncumulative
Is Cumulative
Dividends
Declared
Preferred
Common
Preferred
Common
Year
and Paid
Dividend
Dividend
Dividend
Dividend
Year 1
$18,000
________
________
________
________
Year 2
$36,000
________
________
________
________
Year 3
$60,000
________
________
________
________
Stock
Stock
Cash
Is Noncumulative
Is Cumulative
Dividends
Declared
Preferred
Common
Preferred
Common
Year
and Paid
Dividend
Dividend
Dividend
Dividend
Year 1
$18,000
$18,000
$18,000
Year 2
$36,000
$16,000
22,000
$14,000
Year 3
$60,000
20,000
40,000
219) On June 30, a company declared a cash dividend of $0.35 per common share to the
shareholders of record on July 15. The cash dividend will be paid on July 31. This company has
500,000 shares authorized and 100,000 shares outstanding. Prepare the journal entries required
on June 30, July 15 and July 31.
220) The following selected transactions took place during the current year for a company:
Feb 25
Declared a $2.50 per share cash dividend on 20,000 shares of common stock
outstanding
Mar. 20
Paid the cash dividends declared on Feb. 25.
Dec 31
Closed the $72,000 credit balance in Income Summary that reflects net income
to Retained Earnings.
(a) Prepare the journal entries for these transactions.
(b) If Retained Earnings had a $155,000 credit balance on January 1, calculate its year-end
balance as of December 31.
(a)
Feb. 25
Retained Earnings (20,000 shares * $2.5/share)
50,000
Mar. 20
Common Dividend Payable
50,000
Dec. 31
Income Summary
72,000
(b)
Retained earnings, January 1
Plus net income
Less dividends declared
Retained earnings, December 31