Question

In: Accounting

The year-end balance sheet of Knights, Inc., includes the following stockholders’ equity section (with certain details...

The year-end balance sheet of Knights, Inc., includes the following stockholders’ equity section (with certain details omitted). Stockholders’ equity: 10% cumulative preferred stock, $100 par value, authorized 100,000 shares $4,400,000 Common stock, $2 par value, authorized 2,000,000 shares 3,400,000 Additional paid-in capital: common stock 6,800,000 Donated capital 400,000 Retained earnings 3,160,000 Total stockholders’ equity $18,160,000 Instructions From this information, compute answers to the following questions. a. How many shares of preferred stock have been issued? b. What is the total amount of the annual dividends paid to preferred stockholders? c. How many shares of common stock are outstanding? d. What was the average issuance price per share of common stock? e. What is the amount of legal capital? f. What is the total amount of paid-in capital? g. What is the book value per share of common stock? h. Assume that retained earnings at the beginning of the year amounted to $1,200,000 and the net income for the year was $4,800,000. What was the dividend declared during the year on each share of common stock? (Hint: Net income increases retained earnings, whereas dividends decrease retained earnings.)

Solutions

Expert Solution

Answer

a.

No. of Pref Shares = Issued Capital / Face value of Share

= $4,400,000 / 100 per share

No. of Pref Shares = 44,000 Shares

b.

Preference Dividend = $4,400,000 * 10%

Preference Dividend = $440,000

c.

Common Stock outstanding = $3,400,000 / $2 per share

Common Stock outstanding = 1,700,000 Shares

d.

Issue price = (Common Stock value + Additional Paid up capital) / No. of Common Shares

= ($3,400,000 + 6,800,000) / 1,700,000 Shares

Issue price = $6 Per Share

e.

Legal Capital = Total Shareholder Capital

Legal Capital = $18,160,000

f.

Total Paid in Capital = Total Shareholder’s Equity – Retained Earnings

= $18,160,000 – 3,160,000

Total Paid in Capital = $15,000,000

g.

Book Value = Total Shareholder’s Equity excluding Pref. Capital / No. of Shares

= ($18,160,000 – 4,400,000) / 1,700,000

Book Value = 8.094 per share

h.

Closing Retained Earnings = Opening Retained Earnings + Net Income – Dividend

Dividend = Opening Retained Earnings + Net Income - Closing Retained Earnings

= 1,200,000 + 4,800,000 – 3,160,000

Closing Retained Earnings = $2,840,000

Dear Student, if u have any query, plz feel free to reach me.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The year-end balance sheet of Knights, Inc., includes the following stockholders’ equity section (with certain details...
The year-end balance sheet of Knights, Inc., includes the following stockholders’ equity section (with certain details omitted). Stockholders’ equity: 10% cumulative preferred stock, $100 par value, authorized 100,000 shares $4,400,000 Common stock, $2 par value, authorized 2,000,000 shares 3,400,000 Additional paid-in capital: common stock 6,800,000 Donated capital 400,000 Retained earnings 3,160,000 Total stockholders’ equity $18,160,000 Instructions From this information, compute answers to the following questions. How many shares of preferred stock have been issued? What is the total amount of...
he year-end balance sheet of Columbus Products, Inc., includes the following stockholders’ equity section (with certain...
he year-end balance sheet of Columbus Products, Inc., includes the following stockholders’ equity section (with certain details omitted). Stockholders' equity: Capital stock: 7% cumulative preferred stock, $100 par value $ 13,000,000 Common stock, $5 par value, 5,000,000 shares authorized, 4,200,000 shares issued and outstanding 21,000,000 Additional paid-in capital: Common stock 41,000,000 Retained earnings 64,450,000 Total stockholders’ equity $ 139,450,000 From this information, compute answers to the following questions. a. How many shares of preferred stock have been issued? b. What...
The stockholders' equity section of the balance sheet typically includes the line items of retained earnings,...
The stockholders' equity section of the balance sheet typically includes the line items of retained earnings, common stock, treasury stock, and other comprehensive income. Select two of these line items (common stock and Treasury stock) and explain what their balances might indicate about how Ford Motor Company is utilizing the investment by its stockholders. In your response, address whether you would want to purchase stock in the company based on your analysis. Please use a scholarly article for reference.
Which of the following is true about stockholders' equity? a This section of the Balance Sheet...
Which of the following is true about stockholders' equity? a This section of the Balance Sheet will always equal total assets. b This section of the Balance Sheet can only be increased if the company sells more stock to its stockholders. c Corporations always must have at least two accounts in this section of the Balance Sheet: common stock and retained earnings. d Retained earnings in stockholders equity is the one account on the Balance Sheet that the ending balance...
list the errors the following stockholders equity section of the balance sheet prepared as of the...
list the errors the following stockholders equity section of the balance sheet prepared as of the end of the current year: paid in capital: preferred 2% stock,$80 par(125,000 shares authorized and issued $10,000,000 excess of issue price over par 500,000-10,500,000 retaining earnings $96,700,000 treasury stock(75,000 shares to cost)-1,755,000 dividends payable 430,000 total paid in capital $109,385,000 common stock $20 par (1,000,000 shares authorized, 825,000 shares issued - $17,655,000 organizing costs 300,000 total stockholders equity $127,340,000
Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of...
Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $40 par value, 5,000 shares authorized, ? shares issued $200,000 Common stock, ? par, 10,000 shares authorized, 10,000 shares issued 100,000 Additional paid-in capital—Preferred 9,000 Additional paid-in capital—Common 800,000 Additional paid-in capital—Treasury stock 2,000 Total contributed capital $1,111,000 Retained earnings 39,000 Treasury stock, preferred, 100 shares (3,300) Total stockholders’ equity $ ? Required: Determine the following items...
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January...
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $10 par value, 300,000 shares authorized, 60,000 shares 600,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value 960,000 From treasury stock 60,000 1,020,000 Retained earnings 696,000 2,316,000 Less: Treasury stock (6,000 shares) at cost 276,000 Total Stockholders’ Equity 2,040,000 The following transactions affecting stockholders’ equity occurred during the year: Jan. 8 Issued 15,000 shares of...
Stockholders’ Equity: Transactions and Statement The stockholders’ equity section of Night Corporation’s balance sheet at January...
Stockholders’ Equity: Transactions and Statement The stockholders’ equity section of Night Corporation’s balance sheet at January 1 follows: Common stock, $5 par value, 300,000 shares authorized, 60,000 shares $300,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value $480,000 From treasury stock 30,000 510,000 Retained earnings 348,000 1,158,000 Less: Treasury stock (6,000 shares) at cost 138,000 Total Stockholders’ Equity $1,020,000 The following transactions affecting stockholders’ equity occurred during the year: Jan. 8 Issued 15,000 shares of...
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January...
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $8 par value, 300,000 shares authorized, 60,000 shares 480,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value 720,000 From treasury stock 45,000 765,000 Retained earnings 522,000 1,767,000 Less: Treasury stock (6,000 shares) at cost 207,000 Total Stockholders’ Equity 1,560,000 The following transactions affecting stockholders’ equity occurred during the year: Jan. 8 Issued 15,000 shares of...
Stockholders' Equity Section of Balance Sheet The following accounts and their balances appear in the ledger...
Stockholders' Equity Section of Balance Sheet The following accounts and their balances appear in the ledger of Goodale Properties Inc. on June 30 of the current year: Common Stock, $15 par $792,000 Paid-In Capital from Sale of Treasury Stock 32,500 Paid-In Capital in Excess of Par—Common Stock 21,120 Retained Earnings 1,243,000 Treasury Stock 16,340 Prepare the Stockholders’ Equity section of the balance sheet as of June 30 using Method 1 of Exhibit 8. Eighty thousand shares of common stockare authorized,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT