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In: Statistics and Probability

Listed are the equity sections of balance sheets for years 2014 and 2015 as reported by...

Listed are the equity sections of balance sheets for years 2014 and 2015 as reported by Mountain Air Ski​ Resorts, Inc. The overall value of​ stockholders' equity has risen from $ 2 comma 090 comma 000$2,090,000 to $ 6 comma 600 comma 000.$6,600,000.  Use the statements LOADING... to discover how and why this happened. The company paid total dividends of $ 210 comma 000$210,000 during fiscal 2015. a. What was Mountain​ Air's net income for fiscal​ 2015? b. How many new shares did the corporation issue and sell during the​ year? c. At what average price per share did the new stock sold during 2015​ sell? d. At what price per share did Mountain​ Air's original 460 comma 000460,000 shares​ sell?

Solutions

Expert Solution

The terminologies A,B,C,D,E,F is defined in the following image depicting items of balance sheet:-

(a)

Retained earnings increased from E to F from 2014 to 2015, So increase was (F-E).

Now add the company paid total dividends of $210,000 during fiscal year 2015

So Mountain Air's net income for fiscal 2015 = (F-E) + $210,000

(b)

The number of shares outstanding increased from B shares to A shares from 2014 and 2015.

So number of new shares issued and sold during 2015 = (A-B) shares.

(c)

First calculate the increase in total of common stock and paid-in capital from 2014 to 2015:

The total of common stock and Paid-in capital in excess of par grew from (B+C) to (D+A)

So change was ((D+A) - (B+C)) / (A-B) new shares issued during 2015 gives average price per share.

(d)

The original 4,60,000 shares sold in 2014 were issued at following price:-

= add up common stock (460000) and Paid-in capital in excess of par (C) = (460000+C) for 2014 / B shares issued and outstanding in 2014 = ((460000+C) / 460000) price per share.

orchestra answered 2 years ago
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