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.
How many shares of preferred stock have been issued?
What is the total amount of the annual dividends paid to preferred stockholders?
How many shares of common stock are outstanding?
What was the average issuance price per share of common stock?
What is the amount of legal capital?
What is the total amount of paid-in capital?
What is the book value per share of common stock?
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
- How many shares of preferred stock have been issued?
= $ 4,400,000 / $ 100 par
= 44,000 shares
- What is the total amount of the annual dividends paid to preferred stockholders?
= $ 100 par x 10% x 44,000 shares = 10
x 44000
= $ 440,000
- How many shares of common stock are outstanding?
=$ 3,400,000 / $ 2 par
= 1,700,000 shares
- What was the average issuance price per share of common stock?
= (3400000 + 6800000) / 1700000 shares issued
= 10,200,000 / 1700000 shares
= $ 6 per share
- What is the amount of legal capital?
= $ 4,400,000 + $ 3,400,000
= $ 7,800,000
- What is the total amount of paid-in capital?
=$ 4400000 + $ 3400000 + $ 6800000 + $ 400000
= $ 15,000,000
- What is the book value per share of common stock?
= (3400000 + 6800000 + 400000 + 3160000)/1700000 shares
= 13760000 / 1700000
= $ 8.09
- 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?
= 1200000 + 4800000 – 3160000 ending balance
= $ 2,840,000
ekkarill92 answered 1 year agoRelated 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. a. How many shares of preferred stock have
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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
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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
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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
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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
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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,
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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...
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Paid-In Capital from Sale of Treasury Stock
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Paid-In Capital in Excess of Par—Common Stock
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Retained Earnings
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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,...
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