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Exercise 11-15 Dividend yield computation and interpretation LO A3

Company	Annual Cash Dividend per Share				Market Value per Share
1	$	13.00			$	164.56
2		10.00				117.65
3		8.70				89.69
4		1.80				127.60

  
Compute the dividend yield for each of these four separate companies.
 

   
Problem 11-4A Analysis of changes in stockholders' equity accounts LO C3, P2, P3
[The following information applies to the questions displayed below.]
 
The equity sections from Atticus Group’s 2016 and 2017 year-end balance sheets follow.
 

Stockholders’ Equity (December 31, 2016)
Common stock—$5 par value, 100,000 shares authorized, 40,000 shares issued and outstanding	$	200,000
Paid-in capital in excess of par value, common stock		160,000
Retained earnings		340,000
Total stockholders’ equity	$	700,000

 

Stockholders’ Equity (December 31, 2017)
Common stock—$5 par value, 100,000 shares authorized, 47,200 shares issued, 4,000 shares in treasury	$	236,000
Paid-in capital in excess of par value, common stock		224,800
Retained earnings ($30,000 restricted by treasury stock)		440,000
		900,800
Less cost of treasury stock		(30,000	)
Total stockholders’ equity	$	870,800

The following transactions and events affected its equity during year 2017.
 

Jan.		5		Declared a $0.60 per share cash dividend, date of record January 10.
Mar.		20		Purchased treasury stock for cash.
Apr.		5		Declared a $0.60 per share cash dividend, date of record April 10.
July		5		Declared a $0.60 per share cash dividend, date of record July 10.
July		31		Declared a 20% stock dividend when the stock’s market value was $14 per share.
Aug.		14		Issued the stock dividend that was declared on July 31.
Oct.		5		Declared a $0.60 per share cash dividend, date of record October 10.

Problem 11-4A Part 1
Required:

How many common shares are outstanding on each cash dividend date?
 

   
Bedford Company purchased a 90% interest in Midway Company on January 1 of the current year,
and the purchase price reflected 90% of Midway's book value of equity. Bedford Company had $560,000
net income for the current year before recognizing its share of Midway Company's net income.
If Midway Company had net income of $126,000 for the year, what is the consolidated net income
attributable to Bedford shareholders for the year?
 
$673,400

126,000 x 90% = 113,400 + 560,000 = 673,400
   
Rodriguez Corporation issues 5,000 shares of its common stock for $130,100 cash on February 20.
Prepare journal entries to record this event under each of the following separate situations.
 
The stock has a $20 par value.
The stock has neither par nor stated value.
The stock has a $10 stated value.
 

   
Prepare journal entries to record the following four separate issuances of stock.
A corporation issued 5,000 shares of $20 par value common stock for $120,000 cash.
A corporation issued 2,500 shares of no-par common stock to its promoters in exchange for their efforts,
estimated to be worth $53,000. The stock has a $2 per share stated value.
 
A corporation issued 2,500 shares of no-par common stock to its promoters in exchange for their efforts,
estimated to be worth $53,000. The stock has no stated value.
 
A corporation issued 1,250 shares of $25 par value preferred stock for $84,250 cash.
 

   
Sudoku Company issues 32,000 shares of $6 par value common stock in exchange for land and a building.
The land is valued at $236,000 and the building at $365,000.
Prepare the journal entry to record issuance of the stock in exchange for the land and building.
 

   
On June 30, 2017, Sharper Corporation’s common stock is priced at $30.50 per share
before any stock dividend or split, and the stockholders’ equity section of its balance sheet appears as follows.
 

Common stock—$6 par value, 65,000 shares authorized, 26,000 shares issued and outstanding	$156,000
Paid-in capital in excess of par value, common stock	100,000
Retained earnings	256,000
Total stockholders’ equity	$512,000

Assume that the company declares and immediately distributes a 100% stock dividend.
This event is recorded by capitalizing retained earnings equal to the stock’s par value.
Answer these questions about stockholders’ equity as it exists after issuing the new shares.
a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders’
equity and number of outstanding shares.
 


2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1.
Answer these questions about stockholders’ equity as it exists after issuing the new shares.
a.,b.& c. Complete the below table to calculate the retained earnings balance, total stockholders’ equity and number of outstanding shares.
 

   
York’s outstanding stock consists of 85,000 shares of 6.0% preferred stock with a $5 par value and also 150,000 shares of common stock
with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:
 

2015 total cash dividends	$13,900
2016 total cash dividends	23,500
2017 total cash dividends	280,000
2018 total cash dividends	430,000

Determine the amount of dividends paid each year to each of the two classes of stockholders: preferred and common.
Also compute the total dividends paid to each class for the four years combined. Assume that the preferred stock is noncumulative.
 (Round your “Dividend per Preferred Share” answers to 3 decimal places.)
 
 
York’s outstanding stock consists of 80,000 shares of 7.0% preferred stock with a $5 par value and also 140,000 shares of common stock with a $1 par value.
During its first four years of operation, the corporation declared and paid the following total cash dividends:
 

2015 total cash dividends	$16,500
2016 total cash dividends	26,000
2017 total cash dividends	275,000
2018 total cash dividends	425,000

 
Determine the amount of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative.
Also determine the total dividends paid to each class for the four years combined.
(Round your “Dividend per Preferred Share” answers to 3 decimal places.)
 
 
Alexander Corporation reports the following components of stockholders’ equity on December 31, 2016:
 

Common stock—$25 par value, 70,000 shares authorized, 46,000 shares issued and outstanding	$1,150,000
Paid-in capital in excess of par value, common stock	92,000
Retained earnings	396,000
Total stockholders’ equity	$1,638,000

 
In year 2017, the following transactions affected its stockholders’ equity accounts.
 

Jan 2	Purchased 4,600 shares of its own stock at $25 cash per share.
Jan 7	Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record.
Feb 28	Paid the dividend declared on January 7.
July 9	Sold 1,840 of its treasury shares at $30 cash per share.
Aug 27	Sold 2,300 of its treasury shares at $20 cash per share.
Sept 9	Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record.
Oct 22	Paid the dividend declared on September 9.
Dec 31	Closed the $68,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

 
Required:
1. Prepare journal entries to record each of these transactions for 2017.
 


2. Prepare a statement of retained earnings for the year ended December 31, 2017.
 

 
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2017.
 

   
GAAP identifies several levels of influence/control.
If Company One owns 10% of the outstanding voting stock of Company Two, which level of influence/control is in evidence?

Fair-value method
Significant Influence
Control
Passive
None of the above
   
A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:
 
Debit Cash $7,000; credit Common Stock $7,000.
Debit Investment in Common Stock $7,000; credit Cash $7,000.
Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.
Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000.
Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000.
   
Significant influence is often presumed when the investor owns:


Greater than 20% of the voting stock of the investee
Greater than 50% of the voting stock of the investee
Between 20% and 50% of the voting stock of the investee
Greater than 20% of the voting stock or of the fair value of the investee
None of the above
   
Corporations may buy back their own stock for any of the following reasons except to:
 
Avoid a hostile take-over.
Have shares available for a merger or acquisition.
Have shares available for employee compensation.
Maintain market value for the company stock.
Allow management to assume the voting rights.
   
A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share.
The entry to record this transaction would include:
 
A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000.
A debit to Cash for $14,000.
A credit to Common Stock for $182,000.
A credit to Common Stock for $14,000.
A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196,000.
   
The following data were reported by a corporation:
 

Authorized shares	20,000
Issued shares	15,000
Treasury shares	3,000

12,000
15,000
17,000
20,000
23,000
   
Sweet Company’s outstanding stock consists of 1,000 shares of cumulative 5% preferred stock
with a $100 par value and 10,000 shares of common stock with a $10 par value.
During the first three years of operation, the corporation declared and paid the following total cash dividends.
 

	Dividend Declared
year 1	$2,000
year 2	$6,000
year 3	$32,000

$7,000 preferred; $25,000 common.
$5,000 preferred; $27,000 common.
$15,000 preferred; $17,000 common.
$32,000 preferred; $0 common.
$0 preferred; $32,000 common.

    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2