Question

In: Accounting

UCONN Group has the following items in its current balance sheet: Common Stock 5,000,000 shares authorized,...

UCONN Group has the following items in its current balance sheet:

Common Stock 5,000,000 shares authorized, 1,200,000 issued. $6,000,000

Capital Surplus $3,600,000

Treasury Stock on Common 100,000 shares $1,320,000

Cumulative Preferred Stock 17,000,000 authorized {8%} $2 par $12,000,000

Retained Earnings $30,180,000

1.) If UCONN Group were to provide for a 10% common stock dividend, then how many new shares are to be mailed to existing shareholders?

2.) Assume in question [8] the market price of the common stock was $20 at the time of the stock dividend announcement. What is the journal entry to record the stock dividend?

3.) Explain the concept of the reverse stock split.

Solutions

Expert Solution

Answer to Part 1.
Common Stock issued = 1,200,000 shares
No. of Treasury Stock = 100,000 shares
Common Stock Outstanding = 1,200,000 – 100,000 shares
Common Stock Outstanding = 1,100,000 shares

Stock Dividend declared = 10%
No. of Shares to be issued to Shareholders as Stock Dividend = 1,100,000 * 10%
No. of Shares to be issued to Shareholders as Stock Dividend = 110,000 Shares

Answer to Part 2.

Par Value per Common Stock = $6,000,000 / 1,200,000
Par Value per Common Stock = $5


Answer to Part 3.

Reverse Stock split is a corporation action in which shares are reorganised to be issued in smaller number with a higher par value/ market value as compared to before such corporate action.

For instance,
A reverse stock split of 1 for 4 means one share will be offered against every 4 shares held.


Related Solutions

UCONN Group has the following items in its current balance sheet: Common Stock 5,000,000 shares authorized,...
UCONN Group has the following items in its current balance sheet: Common Stock 5,000,000 shares authorized, 1,200,000 issued. $6,000,000 Capital Surplus $3,600,000 Treasury Stock on Common 100,000 shares $1,320,000 Cumulative Preferred Stock 17,000,000 authorized {8%} $2 par $12,000,000 Retained Earnings $30,180,000 1.) Using the What was the average selling price of UCONN Group’s common stock shares that are listed on the current balance sheet.? 2.) What was the average selling price of UCONN Group’s preferred stock shares that are on...
Snow Inc. has the following items in its current balance sheet: Common Stock 10,000,000 shares authorized...
Snow Inc. has the following items in its current balance sheet: Common Stock 10,000,000 shares authorized with 2,000,000 issued $6,000,000 Capital Surplus $24,000,000 Treasury Stock on Common 100,000 shares $6,000,000 Cumulative Preferred Stock 500,000 authorized [2%] $100 par $8,000,000 Treasury Stock on Preferred Stock 10,000 shares $6,000,000 Retained Earnings $60,000,000 Snow Inc. wishes to announce a total cash dividend of $40,000,000. How is this dividend to be split between the common and preferred stockholders? What is the dividend per share...
Common stock (par $2; no changes during the current year). Shares authorized, 5,000,000. Shares issued,   ? ;...
Common stock (par $2; no changes during the current year). Shares authorized, 5,000,000. Shares issued,   ? ; issue price $7 per share. Shares held as treasury stock, 10,200 shares, cost $5 per share. Net income for the current year, $500,080. Common Stock account, $152,000. Dividends declared and paid during the current year, $2 per share. Retained Earnings balance, beginning of year, $820,000 1. Shares issued Shares outstanding 2. The balance in Additional Paid-in Capital would be 3. Earnings per share is...
Firm A had the following selected items on its balance sheet: Cash $ 32,000,000 Common stock...
Firm A had the following selected items on its balance sheet: Cash $ 32,000,000 Common stock ($60 par; 2,400,000 shares outstanding) 144,000,000 Additional paid-in capital 14,400,000 Retained earnings 68,000,000 How would each of these accounts appear after: a cash dividend of $2 per share? Round the number of shares outstanding to the nearest whole number and the other answers to the nearest dollar. Cash $   Common stock ($   par; shares outstanding) $   Additional paid-in capital $   Retained earnings $   a...
Entity A reported the following items on its balance sheet at the end of the current...
Entity A reported the following items on its balance sheet at the end of the current year. All accounts are listed. Cash $45,000 Accounts payable 80,000 Property, plant & equipment 200,000 Long-term debt 60,000 Common stock 150,000 Accounts receivable 90,000 Retained earnings ? Inventory 75,000 What is Entity A’s Retained Earnings balance at the end of the current year? $270,000 $410,000 $140,000 $120,000 2.5 points    QUESTION 6 Entity I forgot to record four adjusting entries during 2019. Which one...
Which of the following items on a bank's balance sheet count towards regulatory capital? Common stock...
Which of the following items on a bank's balance sheet count towards regulatory capital? Common stock Hybrid Preferred Stock Sub debt Cash repo
briefly describe what each of the following Balance Sheet items indicates to a reader: Common Stock
briefly describe what each of the following Balance Sheet items indicates to a reader: Common Stock
Recording Common and Preferred Stock Transactions Gilmore Company has 20,000 authorized shares of common stock, $2...
Recording Common and Preferred Stock Transactions Gilmore Company has 20,000 authorized shares of common stock, $2 par, and also 20,000 authorized shares of preferred stock, $10 par. Required Record journal entries for the following separate transactions. Analyze and record each transaction separately. a. On January 1, 2020, Gilmore sold 720 shares of common stock and 360 shares of preferred stock for a lump sum of $22,140. The common stock had been selling during the current week at $25 per share,...
A firm has 5,000,000 shares of common stock outstanding, each with a market price of $10.00...
A firm has 5,000,000 shares of common stock outstanding, each with a market price of $10.00 per share. It has 55,000 bonds outstanding, each selling for $990 with a $1,000 face value. The bonds mature in 15 years, have a coupon rate of 8 percent, and pay coupons semiannually. The firm's equity has a beta of 2.0, and the expected market return is 15 percent. The tax rate is 21 percent and the WACC is 16 percent. Calculate the risk-free...
To create a common size balance sheet ____________ all items on the balance sheet by ____________....
To create a common size balance sheet ____________ all items on the balance sheet by ____________. 1. multiply; owners equity 2. multiply; total assets 3. divide; owners equity 4. divide; total assets 5. multiply; debt
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT