Reporting in Action — BTN 11-1
1. As of September 28, 2013, the shares of common stock issued and
outstanding are 899,213 (see balance sheet). As of September 29, 2012,
the number of shares of common stock issued and outstanding is
939,208.
The weighted-average common shares used in calculating earnings per
2. Total stockholders’ equity as of September 28, 2013 ……$123,549,000,000
3. As found on its statement of cash flows, Apple reported $10,564 million
4. Apple’s income statement reports the following
(Fiscal years) 2013
2012
2011
Basic earnings per common share……………… $40.03 $44.64 $28.05
Its basic earnings per common share figure has grown from 2011 to
2012. However, it has slightly decreased from 2012 to 2013.
5. Apple’s consolidated balance sheet reports no shares of treasury stock
6. Answer depends on the financial statement information obtained.
1. Book value per common share = Equity applicable to common shares
Common shares outstanding
2. Earnings per share = Net income
3. Dividend yield = Annual cash dividends per share
Market value per share
4. Price–earnings ratio = Market value per share
Earnings per share
Apple’s price-earnings ratio: $477.25 / $40.03 = 11.92
Google’s price-earnings ratio: $560.92 / $47.24 = 23.72
Interpretation: The price-earnings ratio of Google is more than 2 times
1. The balance sheet of McDonald’s shows that they have both preferred
2. The preferred stock has no par value. There are 165.0 million preferred
issued.
3. In 2013, the financing section of the statement of cash flows shows that
4. In 2013, the financing section of the statement of cash flows shows that
1. The team statement should include the following:
a. When a corporation “buys back” its stock (engages in a treasury
stock acquisition), the effect on financial position is a decrease in
2. The team should establish the acquisition entry as follows
Treasury Stock, Common…………………………..………
13,400
Cash ……………………………………………………….
13,400
Reacquired 100 shares of $100 par value
common stock at a cost of $134 per share.
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Financial and Managerial Accounting, 6th Edition
672
Teamwork in Action (Continued)
d.
Cash ………………………………………………………………………………
12,000
Paid–In Capital, Treasury Stock …………………….…….
1,000
Retained Earnings ………………………………………..……………..
400
Treasury Stock, Common………………………..…
13,400
Received $120 per share for 100 treasury
shares costing $134 per share.
e.
Cash ………………………………………………………………………………
12,000
Retained Earnings ………………………………………..……………..
1,400
Treasury Stock, Common………………………..…
13,400
Received $120 per share for 100 treasury
shares costing $134 per share.
3. When presenting and explaining the above entries to the team, the
following points should be made by the team members:
The similarities in all reissue entries a through e are:
The net affect of the transaction is to increase assets and equity by
1.
Plan A
Plan B
Net income ……………………………………………………..
$ 72,000
$ 72,000
Less preferred dividends ………………………………..
0
(10,000)
Net income for common stockholders …………….
$ 72,000
$ 62,000
Founder’s share of common equity …………………
80%
100%
Founder’s share of income after any preferred
stock dividends …………………………………………………
$ 57,600
$ 62,000
Founder’s initial equity……………………………………
$375,000
$375,000
Founder’s return on equity ……………………………..
15.4%
16.5%
2.
Plan A
Plan B
Net income ……………………………………………………..
$ 16,800
$ 16,800
Less preferred dividends ………………………………..
0
(10,000)
Net income for common stockholders …………….
$ 16,800
$ 6,800
Founder’s share of common equity …………………
80%
100%
Founder’s share of income after any preferred
stock dividends …………………………………………………
$ 13,440
$ 6,800
Founder’s initial equity……………………………………
$375,000
$375,000
Founder’s return on equity ……………………………..
3.6%
1.8%
3. The difference between the answers for parts 1 and 2 arises from the
3.6% in part 2 for Plan A, BUT this is more than the 1.8% for Plan B.
These results indicate that the 8% dividend rate on the preferred stock
is advantageous to the founder as long as the rate of return on the
assets is greater than 8% (this is the same as saying net income is over
1. Book value per common share = Equity applicable to common shares
Common shares outstanding
2. Earnings per share:
= (Net income – Preferred dividends) / Weighted-average common shares outstanding
$0.00098. This means that Samsung’s EPS is about $193.89
3. Samsung’s EPS is ₩197,841, and Samsung declared ₩14,300 in cash
dividends per share during fiscal year 2013. Consequently, for the