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8,000,000
$12,800,000
16,000,000
$28,800,000
8,000,000
$12,800,000
16,000,000
$28,800,000
Common stock, $12 par value, 1,600,000 shares authorized,
Additional paid-in capital
Total contributed capital
Total stockholders' equity
E15A. Stock Split
Before Stock Split
Agard International
Stockholders' Equity
Retained earnings
Agard International
January 15, 2014
Contributed capital:
After Stock Split
January 15, 2014
Contributed capital:
Additional paid-in capital
Total contributed capital
Retained earnings
Total stockholders' equity
Stockholders' Equity
13-17
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
*
Instructor's Resource CD and website.
Note to Instructor: Solutions for Exercises: Set B are provided separately on the
E18A. Dividend Yield and Price/Earnings Ratio
$2.00
E17A. Book Value for Preferred and Common Stock
Dividend Yield
*Rounded
*Rounded
=Market Price per Share
Dividends per Share
13-19
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1
2.
3. The cash dividend declaration on May 31 will not affect net income and will not
affect cash flows in the current period since the cash will be paid out in the next
period. It will, however, reduce retained earnings in the current period.
158,000
$302,400
$352,400
$330,000
50,000
22,400
Retained earnings*
Total contributed capital and retained earnings
Less treasury stock, common (5,000 shares, at cost)
Total stockholders' equity
Total contributed capital
Additional paid-in capital
Contributed capital:
Stockholders' Equity
Kissell Corporation
Balance Sheet
May 31, 2014
Problems
1.
P1. Common Stock Transactions and Stockholders’ Equity
Common Stock
Cash
13-20
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
Per Dividends
Amount Amount Share** Allocated
2.
Per Dividends
Amount Amount Share** Allocated
3.
*
**
***
Amount of dividend / 100,000 shares
Amount of dividend / 5,000 shares
=
Share*
Preferred Stock
Preferred Stock Common Stock
Cumulative
P2. Preferred and Common Stock Dividends and Dividend Yield
Dividends
Total
Dividends
Per
Total
Noncumulative
Dividends
Per
Share*
Market Price per Share
Common Stock
Dividends
Rounded
Dividend Yield Dividends per Share
13-21
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
4.
P2. Preferred and Common Stock Dividends and Dividend Yield (Concluded)
Both cumulative and noncumulative preferred stock have a fixed level of dividends
and are thus similar in this way to long-term debt, which has a fixed level of in-
13-22
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
15
2.
The stockholders' equity section of the balance sheet is an important factor in ana-
lyzing a company's performance because it represents the ownership interest of the
stockholders. For instance, a key performance measure is return on equity, which
measures the earnings of the company against the ownership interest.
no entry
P3. Comprehensive Stockholders’ Equity Transactions
CreditedDebited
Account
Number
Account
Number
Dollar
Amount
Dollar
Amount
no entry
13-23
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
12
P4. Comprehensive Stockholders’ Equity Transactions and Stockholders’ Equity
cash dividends
Payment of preferred and common stock
No entry required
13-24
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
