Question

In: Accounting

The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed...

The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed Cumulative Preferred 8% Stock, $48 par (1,220 shares authorized, 524 shares issued); Common Stock, $23 par (28,895 shares authorized, 10,295 shares issued); and Retained Earnings of $1,076. The Notes to the Financial Statements in the Annual Corporate Report for 2015 indicate that the market values of the stock are $42 per share (Cumulative Preferred) and $18 per share (Common). Forecasts in the Annual Report also indicate that investments in future growth in 2016 are expected to result in sustained increased profits. In consideration of these matters, the Board of Directors has secured approval from the Securities and Exchange Commission for a bond issuance. The Board of Directors has also decided to forego paying dividends in 2015, and to repurchase shares of the corporation’s common stock at par, with a view to reselling the stock when market rates rise with increased profitability. On January 2, 2016, $245,415 in 10 year, 7% bonds with a market interest rate of 9%, and interest payable semiannually, were issued for $182,517. On January 3, the corporation purchased 2,010 shares of its common stock at par. Profits soared during 2016, and on May 1, the corporation resold 1,537 shares of treasury stock, at $5 above par. On June 30, bond interest was paid. On December 31, the corporation showed an after tax Net Income of $50,614. On December 31, bond interest was paid; and dividends were declared and paid. Common shareholders received $2.17 per share. What is the effect of the stock and bond transactions on Cash on the Balance Sheet on December 31, 2016?

Solutions

Expert Solution

Below is the effect on cash :

Proceeds from Issue of Bonds          182,517
Re-purchase of Shares(2010*23)          (46,230)
Sale of Treasury Shares(1537*5)              7,685
Bond Interest Paid(245415*7%)          (17,179)
Preference Dividend(524*48*8%)              2,012
Common Stock Dividend(9822*2.17)            21,314
Net Inflow of Cash          150,119

Please let me know if you require further deatils on this.


Dear Student,

Best effort has been made to give quality and correct answer. But if you find any issues please comment your concern. I will definitely resolve your query.

Also please give your positive rating.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed...
The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed Cumulative Preferred 9% Stock, $45 par (1,303 shares authorized, 550 shares issued); Common Stock, $23 par (28,910 shares authorized, 14,910 shares issued); and Retained Earnings of $1,074. The Notes to the Financial Statements in the Annual Corporate Report for 2015 indicate that the market values of the stock are $40 per share (Cumulative Preferred) and $17 per share (Common). Forecasts in the Annual Report...
The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed...
The Stockholders’ Equity section of the Balance Sheet of Carpenter Corporation on December 31, 2015, showed Cumulative Preferred 9% Stock, $50 par (1,806shares authorized, 500 shares issued); Common Stock, $20 par (25,271 shares authorized, 9,338 shares issued); and Retained Earnings of $1,116. The Notes to the Financial Statements in the Annual Corporate Report for 2015 indicate that the market values of the stock are $42 per share (Cumulative Preferred) and $17per share (Common). Forecasts in the Annual Report also indicate...
The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows: Stockholders’...
The stockholders’ equity section on the December 31, 2014, balance sheet of American Corporation follows: Stockholders’ Equity Contributed capital    Preferred stock (par $21; authorized 17,000 shares, ? issued,      of which 700 shares are held as treasury stock) $ 126,000    Common stock (no-par; authorized 24,000 shares, issued       and outstanding 9,000 shares) 801,000    Contributed capital (includes $3,000 from treasury      stock transactions) 15,000 Retained earnings 48,000 Cost of treasury stock, preferred (16,800 ) Required: 1. Calculate the number of shares of preferred stock...
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...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,000 shares are held as treasury stock) $ 116,000 Additional Paid-in Capital, Preferred 17,690 Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,600 shares) 699,600 Retained Earnings 36,000 Treasury Stock, 1,000 Preferred shares at cost 9,800 Assume that no shares of treasury stock have been sold in the past....
The stockholders' equity section on the December 31 balance sheet of Hadley Corporation reported the following amounts:
  The stockholders' equity section on the December 31 balance sheet of Hadley Corporation reported the following amounts: Preferred Stock (par $50; authorized 10,000 shares, ? issued 322,700 Additional Paid-in Capital, Preferred 18,962 Common Stock (no-par; authorized 20,000 shares, issued and outstanding 5,300 shares) 58,784 Retained Earnings 160,732 Treasury Stock, 1,000 Preferred shares at cost 50,355 What is the total paid in capital for Hadley Corporation?   Shepherd Company’s Stockholder’s equity is as follows: Common Stock, $ 1 par           $13,557 Additional...
The stockholders' equity section of Pats Corporation's balance sheet as of December 31, 2019 is as...
The stockholders' equity section of Pats Corporation's balance sheet as of December 31, 2019 is as follows: Stockholders' Equity Common stock, no par value; authorized, 20,000,000 shares; Issued and outstanding, 4,000,000 shares                                      $32,000,000 Retained earnings                                                                              55,000,000                                                                                                                  $87,000,000 The following events occurred during 2020: Jan. 15 45,000 shares of authorized and unissued common stock sold for $8 per share.            Jan. 26 Declared a cash dividend of 12 cents per share, payable February 25 to stock-holders of record on February...
The stockholders' equity section of Benton Corporation's balance sheet as of December 31, 2018 is as...
The stockholders' equity section of Benton Corporation's balance sheet as of December 31, 2018 is as follows: Stockholders' Equity Common stock, $5 par value; authorized, 2,000,000 shares; issued, 400,000 shares $2,000,000 Paid-in capital in excess of par 850,000 Retained earnings 3,000,000 $5,850,000 The following events occurred from January to August during 2019: 1. Jan. 5 10,000 shares of authorized and unissued common stock were sold for $8 per share. 2. Jan. 16 Purchase back 1,000 treasury shares at $10 per...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 25,000 shares $2,500,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 416,000 shares 2,080,000 Paid-in capital in excess of par—preferred 81,000 Paid-in capital in excess of par—common 806,000 Retained earnings 3,120,000 $8,587,000 The following events occurred during 2016: Jan. 5 8,500 shares of authorized and unissued common stock were sold for...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as...
The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2015, is as follows: Shareholders’ Equity Preferred stock, $100 par value; authorized, 300,000 shares; issued, 32,500 shares $3,250,000 Common stock, $5 par value; authorized, 2,000,000 shares; issued, 442,000 shares 2,210,000 Paid-in capital in excess of par—preferred 87,000 Paid-in capital in excess of par—common 875,000 Retained earnings 2,980,000 The following events occurred during 2016: Jan. 5 10,000 shares of authorized and unissued common stock were sold for $6...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT