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189)
Given the following information about a corporation's current year activities, compute the retained
earnings for the current year.
Retained earnings, January 1
$342,000
Cash dividends
$51,700
Stock dividends
$40,000
Net income
$141,000
190)
Explain where each of the following items should appear in the financial statements of a corporation:
(1) The accounting department discovered that an entry was made last year to Insurance Expense
instead of to Prepaid Insurance. The after-tax effect of the charge to Insurance Expense was $5,000.
(2) The company grants five of its employees the option to purchase 100 shares of its $5 par value
common stock at its current market price of $20 per share anytime with the next five years. None
of the employees exercised the options in the current year.
191)
Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows:
Common stock, $5 par value, 1,000,000 shares
$2,500,000
authorized, 500,000 shares issued…….
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.
Slate Corporation
Statement of Stockholders’ Equity
December 31, 2018
Common
Stock
Paid-in
Capital in
Excess of
Par Value,
Common
Retained
Earnings
Treasury
Stock
Total
Equity
$200,000
$250,000
$500,000
$(20,000)
$930,000
192)
Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred
shareholders during the current year. Beagle had 15,500 weighted-average shares of common stock
outstanding for the year. Calculate the company's earnings per share.
193)
Slate Corporation had the following balances in its stockholders' equity accounts at December 31,
2017:
Common Stock, $10 par, 500,000 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 2018:
February 3 Sold and issued 2,000 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 2018. Use the form
below.
Balance, December
103
$200,000
$250,000
$500,000
$(20,000)
$930,000
31, 2017
194)
A corporation had current year net income of $237,500. It paid preferred dividends of $40,000 cash
and had 480,000 weighted-average shares of common stock outstanding. Calculate the
corporation's earnings per share.
195)
A company's stock is selling for $63.20 per share and its earnings per share is $3.60 for the current
year. Calculate the price-earnings ratio.
196)
A company reported net income of $836,000 for the current year. The year-end market price per
common share was $12 and there were 475,000 weighted-average shares of common stock
outstanding. Calculate the company's price-earnings ratio.
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.
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
207)
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.
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:
109
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, $1 par, 5,000,000 shares
4,000,000
authorized, 4,000,000 shares issued ………………..
Paid-in capital in excess of par, Common …………..
1,200,000
Total paid-in capital ………………………………..
$ 7,825,000
Retained earnings ……………………………………..
10,675,000
Total stockholders' equity …………………………….
Determine the following:
$18,500,000
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 a call price of $51.50 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.
210)
A corporation reports the following year-end stockholders' equity:
Paid-in capital:
(1) Par value for the preferred stock.
(2) Book value per share for both preferred stock and common stock assuming no dividends in
110
arrears.
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
Paid-in capital in excess of par value, Preferred stock……. 50,000
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 ………
40,000
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 values
per preferred share and per common share.
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.
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.
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:
$ 500,000
Preferred stock, $40 par, 6%, 12,500 shares issued
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.
Assuming Preferred
Assuming Preferred
Stock
Stock
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 2016 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.
115
Stock
Stock
Cash
Is Noncumulative
Is Cumulative
Dividends
Declared
Preferred
Common
Preferred
Common
Year
and Paid
Dividend
Dividend
Dividend
Dividend
2016
$18,000
________
________
________
________
2017
$36,000
________
________
________
________
2018
$60,000
________
________
________
________
