162. Dawls Corporation reported stockholders’ equity on December 31 of the prior year as
follows:
Common stock, $5 par value, 1,000,000
shares authorized, 500,000 shares issued……. $2,500,000
Paid-in capital in excess of par, common stock… 1,000,000
Retained earnings………………………………. 3,000,000
The following selected transactions occurred during the current year:
Feb. 15 The board of directors declared a 5% stock dividend to stockholders of
record on March 1, payable March 20. The stock was selling for $8 per share.
Mar. 9 Distributed the stock dividend.
May 1 A cash dividend of $0.30 per share was declared by the board of directors
to stockholders of record on May 20, payable June 1.
June 1 Paid the cash dividend.
Aug. 20 The board decided to split the stock 4-for-1, effective on September 1.
Sept. 1 Stock split 4-for-1.
Dec. 31 Earned a net income of $800,000 for the current year.
Prepare a statement of retained earnings as of December 31 of the current year.
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163. Marble Corporation had the following balances in its stockholders’ equity accounts at
December 31, 2013:
Common Stock, $10 par, 50,000 shares authorized,
20,000 shares issued …………………………………. $200,000
Paid-in Capital in Excess of Par Value, Common …………250,000
Retained Earnings ……………………………………….. 500,000
Treasury Stock, 1,000 shares …………………………… (20,000)
Total stockholders’ equity ……………………………….. $930,000
The following transactions occurred during 2014:
February 3 Sold and issued 3,000 shares of common stock for $22 per share.
May 10 Declared a $0.50 per share dividend on common stock.
October 12 Sold 500 shares of the treasury stock for $20 per share.
December 31 Net income for the year was determined to be $75,000.
Based on the above information, prepare a statement of stockholders’ equity for 2014. Use the
form below.
Marble Corporation
Statement of Stockholders’ Equity
December 31, 2014
Common Stock Paid-in Capital in Excess of Par Value, Common
Retained Earnings
Treasury Stock
Total Equity
Balance, December 31, 2013 $200,000 $250,000 $500,000 $(20,000)
$930,000
Balance, December 31, 2014
164. Quark Company earned $90,000 in income and paid cash dividends of $10,000 to
preferred shareholders during the current year. Quark had 12,500 weighted-average shares of
common stock outstanding for the year. Calculate the company’s earnings per share.
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165. A corporation had current year net income of $2,375,000. It paid preferred dividends of
$80,000 cash and had 500,000 weighted-average shares of common stock outstanding.
Calculate the corporation’s earnings per share.
166. A company’s stock is selling for $67.20 per share and its earnings per share is $3.50 for
the current year. Calculate the price-earnings ratio.
167. A company reported net income of $850,000 for the current year. The year-end market
price per common share was $12 and there were 425,000 weighted-average shares of common
stock outstanding. Calculate the company’s price-earnings ratio.
168. A company reported $990,000 in net income for the current year. Total weighted-
average number of common shares outstanding are 150,000 shares, and the year-end market
price is $79.20 per common share. Calculate the company’s price earnings ratio.
169. A corporation reported net income of $3,730,000 and paid preferred cash dividends of
$100,000 during the current year. There were 600,000 weighted-average shares of common
stock outstanding and the market price per common share was $88.33 at year-end. Calculate
the company’s price-earnings ratio.
170. A company reported net income of $478,000 and paid $5,500 in preferred cash dividends
during the current year. The company had 100,000 common shares issued, and 10,000
common shares in treasury during the year. The year-end market price per common share was
$43.05. Calculate the company’s price-earnings ratio.
171. A company’s stock is selling for $35 per share at year-end. This current year it paid
shareholders a $2.45 per share cash dividend, reported earnings per share of $12.00, and had
750,000 common shares outstanding at year-end. Calculate the company’s dividend yield.
172. A corporation paid a cash dividend of $0.07 per share during the current year. It had
550,000 common shares outstanding at year-end, its current year earnings per share was
$3.85, and the stock’s year-end market price was $17.50 per share. Calculate the company’s
dividend yield.
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173. A company 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 1,000 shares of preferred stock outstanding and 6,000 shares of common stock
outstanding during the year, and the market price per share of common stock was $45.
Calculate the company’s dividend yield for common stock.
174. A company paid a cash dividend of $0.44 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.
175. A company has 500,000 common shares authorized, 400,000 common shares issued, and
15,000 common shares in treasury stock at the current year-end. It paid $0.24 per share in
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.
176. A corporation has $1,750,000 in stockholders’ equity and 350,000 weighted-average
shares of common stock outstanding. Calculate the book value per common share.
177. A company has $2,400,000 in stockholders’ equity that includes 500 shares of $50 par
value noncallable preferred stock outstanding and 250,000 shares of common stock
outstanding. Calculate the book value per (1) preferred share, and (2) common share.
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178. A company reports the following stockholders’ equity:
Paid-in Capital:
Common stock, $10 par, 500,000 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.
179. The stockholders’ equity section of a company’s year-end balance sheet follows:
Preferred stock, $100 par value, 9%
cumulative and nonparticipating, 5,000
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, $5 par value, 150,000 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
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Total paid-in capital ………………………………………… $1,450,000
Retained earnings …………………………………………… 1,660,000
Total stockholders’ equity …………………………………… $3,110,000
The preferred stock has a call price of $103 per share plus dividends in arrears. Only one year
of dividends is in arrears. Calculate the book value per (1) preferred share, and (2) common
share.
180. 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
Paid-in capital in excess of par, Preferred………….. 125,000
Common stock, $10 par, 500,000 shares
Authorized, 400,000 shares issued ……………….. 4,000,000
Paid-in capital in excess of par, Common ………….. 1,200,000
Total paid-in capital ……………………………….. $ 7,825,000
Retained earnings …………………………………….. 10,775,000
Total stockholders’ equity ……………………………. $18,600,000
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Determine the following:
(1) Par value for the preferred stock.
(2) Book value per share for both preferred stock and common stock assuming a call price per
share of $52 for preferred and no dividends in arrears.
181. 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
Paid-in capital in excess of par value, Preferred stock……. 50,000
Common stock, $10 par value, 50,000 shares authorized,
10,000 shares issued and outstanding.…………………….. 100,000
Paid-in capital in excess of par value, Common stock …… 40,000
Retained earnings ………………………………………. 95,000
Total stockholders’ equity ………………………………. $410,000
(1) Assuming that the preferred stock is not callable and no dividends are in arrears, compute
the book values per preferred share and per common share.
(2) Assuming that the preferred stock has a call price of $30 per share and one year of
cumulative preferred dividends is in arrears, compute the book values per preferred share and
per common share.
182. A company is authorized to issue 750,000 shares of $5 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.
15 Exchanged 10,000 shares of common stock for equipment with a market value of
$80,000.
Feb. 1 Exchanged 500 shares of common stock for $3,000 of legal services Incurred during
the company’s organization.
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183. On August 1, a corporation issued 15,000 shares of no-par common stock in exchange
for a tract of land having a market value of $215,000. The common stock has a stated value of
$10 per share. Prepare the general journal entry to record this transaction.
184. A corporation had the following stock outstanding when the company’s board of
directors declared a $95,000 cash dividend in the current year:
Preferred stock, $100 par, 6%, 5,000 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.
185. A corporation had the following stock outstanding when the company’s board of
directors declared a $95,000 cash dividend during the current year:
Preferred stock, $100 par, 6%, 5,000 shares issued $ 500,000
Common stock, $10 par, 75,000 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.
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186. A company has $100,000 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.
187. A company was organized in January 2012 and has 2,000 shares of $100 par value, 10%,
nonparticipating preferred stock outstanding and 30,000 shares of $10 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
2012 $15,000 ________ ________ ________ ________
2013 $36,000 ________ ________ ________ ________
2014 $60,000 ________ ________ ________ ________
188. On July 31, a company declared a cash dividend of $0.25 per common share to the
shareholders of record on August 15. The cash dividend will be paid on August 25. This
company has 500,000 shares authorized and 100,000 shares outstanding. Prepare the journal
entries required on July 31, August 15 and August 25.