Prepare Vega Corporation's retained earnings statement for
the year ended December 31, 2017.
LO 3
14-39
Retained Earnings Statement
For the Year Ended December 31, 2017
Vega Corporation
Retained Earnings, January 1, 2017 $5,130,000
Add: Net Income for 2017 2,000,000
Total 7,130,000
Less: Dividends Declared and Paid 250,000
Retained Earnings, December 31, 2017 $6,880,000
LO 3
Magic Blades stock has risen rapidly to $50 per share. Th.docxsmile790243
Magic Blade's stock has risen rapidly to $50 per share. The increase is due to excitement about its new knife
that uses a light beam to slice fruits and vegetables. This process enhances the final appearance and quality
of salads and fruit trays.
The board of directors is considering strategies to divide the corporate ownership into more shares of stock,
and bring about some reduction in the price per share. They are considering a stock split, small stock dividend,
or large stock dividend. The board is unsure of the accounting effects of such transactions, and has requested
information about how stockholders' equity would be impacted.
Prior to the contemplated stock transaction, equity consisted of:
Stockholders’ Equity
Common stock, $2 par value, 2,000,000 shares authorized,
500,000 shares issued and outstanding $1,000,000
Paid-in capital in excess of par 2,000,000
Retained earnings 6,000,000
Total stockholders’ equity $9,000,000
(a) Assuming the board were to declare a 2 for 1 split, how would the revised stockholders' equity
appear?
(b) Assuming the board were to declare a 15% stock dividend, how would the revised stockholders'
equity appear?
B-14.07 Stock dividends and splits
x
SPREADSHEET
TOOL:
Holding a
cell reference
constant
Mike
Highlight
Summary information for Branford Corporation's balance sheet follows:
BRANFORD CORPORATION
Balance Sheet
August 15, 20X4
Assets
Cash $ 125,000
Accounts receivable 250,000
Inventory 750,000
Property, plant, & equipment (net) 860,000
Total assets $1,985,000
Liabilities
Accounts payable $125,000
Accrued liabilities 260,000
Notes payable 290,000
Total liabilities $ 675,000
Stockholders’ equity
Common stock, $5 par $700,000
Paid-in capital in excess of par 300,000
Retained earnings 310,000
Total stockholders’ equity 1,310,000
Total liabilities and equity $1,985,000
Branford's business is growing rapidly, and the company needs to expand its manufacturing facilities. This
expansion will require the company to obtain an additional $1,000,000 in cash. The company is exploring
five alternatives to obtain the necessary capital:
Equity structure and impact I-14.01
Mike
Highlight
366 | CHAPTER 14
DEBT OPTION:
Branford is able to borrow, on a 5-year note, the full amount needed. The interest rate on
this note would be 7%, and the note would require monthly payments.
COMMON STOCK OPTION:
Branford has identified an investor who is willing to pay $1,000,000 for 40,000 newly is-
sued common shares. Common shares have been paying a dividend of $0.50 per share.
Branford anticipates that this dividend rate will be maintained.
NONCUMULATIVE PREFERRED STOCK OPTION:
Branford has identified a hedge fund that will pay $1,000,000 for 8% noncumulative
preferred stock to be issued at par.
CUMULATIVE PREFERRED STOCK OPTION:
Branford has identified an insurance company that will pay $1,000,000 for 6% cumulative
preferred ...
8.value1.00 pointsAmerican Health Systems currently has 6.docxalinainglis
8.
value:
1.00 points
American Health Systems currently has 6,400,000 shares of stock outstanding and will report earnings of $13 million in the current year. The company is considering the issuance of 1,500,000 additional shares that will net $60 per share to the corporation.
a.
What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Dilution
$ per share
b-1.
Assume that American Health Systems can earn 8 percent on the proceeds of the stock issue in time to include them in the current year’s results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.)
Earnings per share
$
b-2.
Should the new issue be undertaken based on earnings per share?
Yes
No
9.
value:
1.00 points
Assume Sybase Software is thinking about three different size offerings for issuance of additional shares.
Size of Offer
Public Price
Net to Corporation
a.
$
2.4
million
$
46
$
42.60
b.
7.0
million
46
43.20
c.
28.0
million
46
43.50
What is the percentage underwriting spread for each size offer? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Size of Offer
Underwriting Spread
a.
$2.4 million
%
b.
$7.0 million
%
c.
$28.0 million
%
0.
value:
2.00 points
The Wrigley Corporation needs to raise $35 million. The investment banking firm of Tinkers, Evers, & Chance will handle the transaction.
a.
If stock is utilized, 2,200,000 shares will be sold to the public at $17.20 per share. The corporation will receive a net price of $16.00 per share. What is the percentage underwriting spread per share?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per share
%
b.
If bonds are utilized, slightly over 35,200 bonds will be sold to the public at $1,006 per bond. The corporation will receive a net price of $993 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per bond
%
c-1.
Which alternative has the larger percentage of spread?
Stock
Bond
c-2.
Is this the normal relationship between the two types of issues?
Yes
No
11.
value:
2.00 points
Kevin’s Bacon Company Inc. has earnings of $5 million with 2,400,000 shares outstanding before a public distribution. Five hundred thousand shares will be included in the sale, of which 300,000 are new corporate shares, and 200,000 are shares currently owned by Ann Fry, the founder and CEO. The 200,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her.
The net price from the offering will be $18.50 and the corporate proceeds a.
Brief Exercise 15-4Ravonette Corporation issued 375 shares of $1.docxAASTHA76
Brief Exercise 15-4
Ravonette Corporation issued 375 shares of $15 par value common stock and 110 shares of $48 par value preferred stock for a lump sum of $20,025. The common stock has a market price of $30 per share, and the preferred stock has a market price of $100 per share.
Prepare the journal entry to record the issuance. (Round answers to 0 decimal places, e.g., 1520. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Cash
20025
Preferred Stock
Paid-in Capital in Excess of Par - Preferred Stock
Common Stock
Paid-in Capital in Excess of Par - Common Stock
Exercise 15-12
Lotoya Davis Corporation has 10.12 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 62 cents per share cash dividend to stockholders of record as of June 14, payable June 30.
(a) Prepare the journal entry for each of the dates above assuming the dividend represents a distribution of earnings. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
6/1
6/14
6/30
(b) How would the entry differ if the dividend were a liquidating dividend? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Warning
Exercise 15-19
Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling $4,418,100.
Jana Kingston Co.
Mary Ann Benson Co.
Current liabilities
$315,600
Current liabilities
$754,600
Long-term debt, 10%
1,281,000
Common stock ($20 par)
2,945,000
Common stock ($20 par)
2,103,000
Retained earnings (Cash dividends, $328,900)
718,500
Retained earnings (Cash dividends, $227,700)
718,500
$4,418,100
$4,418,100
For the year, each company has earned the same income before interest and taxes.
Jana Kingston Co.
Mary Ann Benson Co.
Income before interest and taxes
$1,203,000
$1,203,000
Interest expense
128,100
0
1,074,900
1,203,000
Income taxes (45%)
483,705
541,350
Net income
$591,195
$661,650
At year end, the market price of Kingston’s stock was $101 per share, and Benson’s was $63.50. Assume balance sheet amounts are representative for the entire year.
(a) Calculate the return on total assets? (Round answers to 2 decimal places, e.g. 16.85%.)
Return on total assets
Kingston Company
%
Benson Company
%
Which company is more profitable in terms of return on total assets? (b) Calculate the return on common sto ...
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Week 5 Final Exam
CPA Question 01
CPA Question 02
CPA Question 05
Question 29
Brief Exercise 15-4
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This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
CPA Question 05
Question 29
Brief Exercise 15-4
Exercise 15-1
4.
.
5.
6.
7. The Manning Company has financial statements as shown next, which are representative of the company’s historical average.
The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Income Statement
Sales
$
220,000
Expenses
171,200
Earnings before interest and taxes
$
48,800
Interest
8,300
Earnings before taxes
$
40,500
Taxes
16,300
Earnings after taxes
$
24,200
Dividends
$
7,260
Balance Sheet
Assets
Liabilities and Stockholders' Equity
Cash
$
8,000
Accounts payable
$
23,400
Accounts receivable
33,000
Accrued wages
1,850
Inventory
69,000
Accrued taxes
3,350
Current assets
$
110,000
Current liabilities
$
28,600
Fixed assets
93,000
Notes payable
8,300
Long-term debt
21,500
Common stock
117,000
Retained earnings
27,600
Total assets
$
203,000
Total liabilities and
stockholders' equity
$
203,000
Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations. Input the amount as a positive value.)
The firm $ in .
10. Healthy Foods Inc. sells 50-pound bags of grapes to the military for $25 a bag. The fixed costs of this operation are $130,000, while the variable costs of grapes are $.20 per pound.
a.
What is the break-even point in bags? (Round your answer to 2 decimal places.)
Break-even point
bags
b.
Calculate the profit or loss (EBIT) on 12,000 bags and on 34,000 bags. (Input all amounts as positive values. Round your answers to the nearest whole number.)
Bags
Profit/Loss
Amount
12,000
$
34,000
$
c.
What is the degree of operating leverage at 30,000 bags and at 34,000 bags? (Round your answers to 2 decimal places.)
Bags
Degree of
Operating Leverage
30,000
34,000
d.
If Healthy Foods has an annual interest expense of $11,000, calculate the degree of financial leverage at both 30,000 and 34,000 bags. (Round your answers to 2 decimal places.)
Bags
Degree of
Financial Leverage
30,000
34,000
e.
What is the degree of combined leverage at both 30,000 and 34,000 bags? (Round your answers to 2 decimal places.)
Bags
Degree of
Combined Leverage
30,000
34,000
12. Lenow’s Drug Stores and Hall’s Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented next.
Lenow
Hall
Debt @ 10%
$
230,000 ...
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This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
Acc 423 final exam guide (new 2018, with excel file)berrystraw3
For more course tutorials visit
uophelp.com is now newtonhelp.com
www.newtonhelp.com
This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
CPA Question 05
Question 29
Brief Exercise 15-4
Exercise 15-1
CPA Question 04
CPA Question 06
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
Magic Blades stock has risen rapidly to $50 per share. Th.docxsmile790243
Magic Blade's stock has risen rapidly to $50 per share. The increase is due to excitement about its new knife
that uses a light beam to slice fruits and vegetables. This process enhances the final appearance and quality
of salads and fruit trays.
The board of directors is considering strategies to divide the corporate ownership into more shares of stock,
and bring about some reduction in the price per share. They are considering a stock split, small stock dividend,
or large stock dividend. The board is unsure of the accounting effects of such transactions, and has requested
information about how stockholders' equity would be impacted.
Prior to the contemplated stock transaction, equity consisted of:
Stockholders’ Equity
Common stock, $2 par value, 2,000,000 shares authorized,
500,000 shares issued and outstanding $1,000,000
Paid-in capital in excess of par 2,000,000
Retained earnings 6,000,000
Total stockholders’ equity $9,000,000
(a) Assuming the board were to declare a 2 for 1 split, how would the revised stockholders' equity
appear?
(b) Assuming the board were to declare a 15% stock dividend, how would the revised stockholders'
equity appear?
B-14.07 Stock dividends and splits
x
SPREADSHEET
TOOL:
Holding a
cell reference
constant
Mike
Highlight
Summary information for Branford Corporation's balance sheet follows:
BRANFORD CORPORATION
Balance Sheet
August 15, 20X4
Assets
Cash $ 125,000
Accounts receivable 250,000
Inventory 750,000
Property, plant, & equipment (net) 860,000
Total assets $1,985,000
Liabilities
Accounts payable $125,000
Accrued liabilities 260,000
Notes payable 290,000
Total liabilities $ 675,000
Stockholders’ equity
Common stock, $5 par $700,000
Paid-in capital in excess of par 300,000
Retained earnings 310,000
Total stockholders’ equity 1,310,000
Total liabilities and equity $1,985,000
Branford's business is growing rapidly, and the company needs to expand its manufacturing facilities. This
expansion will require the company to obtain an additional $1,000,000 in cash. The company is exploring
five alternatives to obtain the necessary capital:
Equity structure and impact I-14.01
Mike
Highlight
366 | CHAPTER 14
DEBT OPTION:
Branford is able to borrow, on a 5-year note, the full amount needed. The interest rate on
this note would be 7%, and the note would require monthly payments.
COMMON STOCK OPTION:
Branford has identified an investor who is willing to pay $1,000,000 for 40,000 newly is-
sued common shares. Common shares have been paying a dividend of $0.50 per share.
Branford anticipates that this dividend rate will be maintained.
NONCUMULATIVE PREFERRED STOCK OPTION:
Branford has identified a hedge fund that will pay $1,000,000 for 8% noncumulative
preferred stock to be issued at par.
CUMULATIVE PREFERRED STOCK OPTION:
Branford has identified an insurance company that will pay $1,000,000 for 6% cumulative
preferred ...
8.value1.00 pointsAmerican Health Systems currently has 6.docxalinainglis
8.
value:
1.00 points
American Health Systems currently has 6,400,000 shares of stock outstanding and will report earnings of $13 million in the current year. The company is considering the issuance of 1,500,000 additional shares that will net $60 per share to the corporation.
a.
What is the immediate dilution potential for this new stock issue? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Dilution
$ per share
b-1.
Assume that American Health Systems can earn 8 percent on the proceeds of the stock issue in time to include them in the current year’s results. Calculate earnings per share. (Do not round intermediate calculations and round your answer to 2 decimal places.)
Earnings per share
$
b-2.
Should the new issue be undertaken based on earnings per share?
Yes
No
9.
value:
1.00 points
Assume Sybase Software is thinking about three different size offerings for issuance of additional shares.
Size of Offer
Public Price
Net to Corporation
a.
$
2.4
million
$
46
$
42.60
b.
7.0
million
46
43.20
c.
28.0
million
46
43.50
What is the percentage underwriting spread for each size offer? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Size of Offer
Underwriting Spread
a.
$2.4 million
%
b.
$7.0 million
%
c.
$28.0 million
%
0.
value:
2.00 points
The Wrigley Corporation needs to raise $35 million. The investment banking firm of Tinkers, Evers, & Chance will handle the transaction.
a.
If stock is utilized, 2,200,000 shares will be sold to the public at $17.20 per share. The corporation will receive a net price of $16.00 per share. What is the percentage underwriting spread per share?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per share
%
b.
If bonds are utilized, slightly over 35,200 bonds will be sold to the public at $1,006 per bond. The corporation will receive a net price of $993 per bond. What is the percentage of underwriting spread per bond? (Relate the dollar spread to the public price.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Underwriting spread per bond
%
c-1.
Which alternative has the larger percentage of spread?
Stock
Bond
c-2.
Is this the normal relationship between the two types of issues?
Yes
No
11.
value:
2.00 points
Kevin’s Bacon Company Inc. has earnings of $5 million with 2,400,000 shares outstanding before a public distribution. Five hundred thousand shares will be included in the sale, of which 300,000 are new corporate shares, and 200,000 are shares currently owned by Ann Fry, the founder and CEO. The 200,000 shares that Ann is selling are referred to as a secondary offering and all proceeds will go to her.
The net price from the offering will be $18.50 and the corporate proceeds a.
Brief Exercise 15-4Ravonette Corporation issued 375 shares of $1.docxAASTHA76
Brief Exercise 15-4
Ravonette Corporation issued 375 shares of $15 par value common stock and 110 shares of $48 par value preferred stock for a lump sum of $20,025. The common stock has a market price of $30 per share, and the preferred stock has a market price of $100 per share.
Prepare the journal entry to record the issuance. (Round answers to 0 decimal places, e.g., 1520. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Cash
20025
Preferred Stock
Paid-in Capital in Excess of Par - Preferred Stock
Common Stock
Paid-in Capital in Excess of Par - Common Stock
Exercise 15-12
Lotoya Davis Corporation has 10.12 million shares of common stock issued and outstanding. On June 1, the board of directors voted an 62 cents per share cash dividend to stockholders of record as of June 14, payable June 30.
(a) Prepare the journal entry for each of the dates above assuming the dividend represents a distribution of earnings. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
6/1
6/14
6/30
(b) How would the entry differ if the dividend were a liquidating dividend? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
Warning
Exercise 15-19
Shown below is the liabilities and stockholders’ equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling $4,418,100.
Jana Kingston Co.
Mary Ann Benson Co.
Current liabilities
$315,600
Current liabilities
$754,600
Long-term debt, 10%
1,281,000
Common stock ($20 par)
2,945,000
Common stock ($20 par)
2,103,000
Retained earnings (Cash dividends, $328,900)
718,500
Retained earnings (Cash dividends, $227,700)
718,500
$4,418,100
$4,418,100
For the year, each company has earned the same income before interest and taxes.
Jana Kingston Co.
Mary Ann Benson Co.
Income before interest and taxes
$1,203,000
$1,203,000
Interest expense
128,100
0
1,074,900
1,203,000
Income taxes (45%)
483,705
541,350
Net income
$591,195
$661,650
At year end, the market price of Kingston’s stock was $101 per share, and Benson’s was $63.50. Assume balance sheet amounts are representative for the entire year.
(a) Calculate the return on total assets? (Round answers to 2 decimal places, e.g. 16.85%.)
Return on total assets
Kingston Company
%
Benson Company
%
Which company is more profitable in terms of return on total assets? (b) Calculate the return on common sto ...
For more course tutorials visit
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This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
CPA Question 05
Question 29
Brief Exercise 15-4
For more course tutorials visit
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This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
CPA Question 05
Question 29
Brief Exercise 15-4
Exercise 15-1
4.
.
5.
6.
7. The Manning Company has financial statements as shown next, which are representative of the company’s historical average.
The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.
Income Statement
Sales
$
220,000
Expenses
171,200
Earnings before interest and taxes
$
48,800
Interest
8,300
Earnings before taxes
$
40,500
Taxes
16,300
Earnings after taxes
$
24,200
Dividends
$
7,260
Balance Sheet
Assets
Liabilities and Stockholders' Equity
Cash
$
8,000
Accounts payable
$
23,400
Accounts receivable
33,000
Accrued wages
1,850
Inventory
69,000
Accrued taxes
3,350
Current assets
$
110,000
Current liabilities
$
28,600
Fixed assets
93,000
Notes payable
8,300
Long-term debt
21,500
Common stock
117,000
Retained earnings
27,600
Total assets
$
203,000
Total liabilities and
stockholders' equity
$
203,000
Using the percent-of-sales method, determine whether the company has external financing needs, or a surplus of funds. (Hint: A profit margin and payout ratio must be found from the income statement.) (Do not round intermediate calculations. Input the amount as a positive value.)
The firm $ in .
10. Healthy Foods Inc. sells 50-pound bags of grapes to the military for $25 a bag. The fixed costs of this operation are $130,000, while the variable costs of grapes are $.20 per pound.
a.
What is the break-even point in bags? (Round your answer to 2 decimal places.)
Break-even point
bags
b.
Calculate the profit or loss (EBIT) on 12,000 bags and on 34,000 bags. (Input all amounts as positive values. Round your answers to the nearest whole number.)
Bags
Profit/Loss
Amount
12,000
$
34,000
$
c.
What is the degree of operating leverage at 30,000 bags and at 34,000 bags? (Round your answers to 2 decimal places.)
Bags
Degree of
Operating Leverage
30,000
34,000
d.
If Healthy Foods has an annual interest expense of $11,000, calculate the degree of financial leverage at both 30,000 and 34,000 bags. (Round your answers to 2 decimal places.)
Bags
Degree of
Financial Leverage
30,000
34,000
e.
What is the degree of combined leverage at both 30,000 and 34,000 bags? (Round your answers to 2 decimal places.)
Bags
Degree of
Combined Leverage
30,000
34,000
12. Lenow’s Drug Stores and Hall’s Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented next.
Lenow
Hall
Debt @ 10%
$
230,000 ...
For more course tutorials visit
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This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
Acc 423 final exam guide (new 2018, with excel file)berrystraw3
For more course tutorials visit
uophelp.com is now newtonhelp.com
www.newtonhelp.com
This Tutorial contains Excel File which can be used for any change in values
Week 5 Final Exam
CPA Question 01
CPA Question 02
CPA Question 05
Question 29
Brief Exercise 15-4
Exercise 15-1
CPA Question 04
CPA Question 06
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...
ch14-200529002439.pdf
1. 14-1
Corporations: Dividends, Retained
Earnings, and Income Reporting
14
Learning Objectives
Explain how to account for cash dividends.
Explain how to account for stock dividends and splits.
Prepare and analyze a comprehensive stockholders’ equity
section.
3
2
1
Describe the form and content of corporation income
statements.
4
2. 14-2
Distribution of cash or stock to stockholders on a pro rata
(proportional to ownership) basis.
Types of Dividends:
1. Cash dividends.
2. Property dividends.
Dividends are generally reported quarterly as a dollar amount
per share.
3. Stock dividends.
4. Scrip (promissory note).
LO 1
LEARNING
OBJECTIVE
Explain how to account for cash dividends.
1
3. 14-3
For a corporation to pay a cash dividend, it must have:
1. Retained earnings - Payment of cash dividends from
retained earnings is legal in all states.
2. Adequate cash.
3. A declaration of dividends by the Board of Directors.
Cash Dividends
LO 1
4. 14-4
Three dates are important: Illustration 14-1
Key dividend dates
LO 1
Cash Dividends
5. 14-5
Illustration: On Dec. 1, the directors of Media General declare a 50
cents per share cash dividend on 100,000 shares of $10 par value
common stock. The dividend is payable on Jan. 20 to shareholders of
record on Dec. 22.
Dec. 1 (Declaration Date)
Cash Dividends 50,000
Dividends Payable 50,000
Dec. 22 (Date of Record)
Jan. 20 (Payment Date)
Dividends Payable 50,000
Cash 50,000
No entry
LO 1
Cash Dividends
6. 14-6
Right to receive dividends before common stockholders.
Per share dividend amount is stated as a percentage of
the preferred stock’s par value or as a specified amount.
Cumulative Dividend Preferred
stockholders must be paid both
current-year dividends and any
unpaid prior-year dividends
before common stockholders
receive dividends.
Dividend Preferences
LO 1
7. 14-7
CUMULATIVE DIVIDEND
Illustration: Scientific Leasing has 5,000 shares of 7%, $100 par
value, cumulative preferred stock outstanding. Each $100 share
pays a $7 dividend (.07 x $100). The annual dividend is $35,000
(5,000 x $7 per share). If dividends are two years in arrears,
preferred stockholders are entitled to receive the following
dividends in the current year.
Illustration 14-2
Computation of total dividends to preferred stock
Advance slide in slide show to reveal dividend amounts. LO 1
Dividend Preferences
8. 14-8
ALLOCATING CASH DIVIDENDS BETWEEN
PREFERRED AND COMMON STOCK
Holders of cumulative preferred stock must be paid any unpaid
prior-year dividends and their current year’s dividend before
common stockholders receive dividends.
LO 1
Dividend Preferences
9. 14-9
Illustration: On December 31, 2017, IBR Inc. has 1,000 shares of
8%, $100 par value cumulative preferred stock. It also has 50,000
shares of $10 par value common stock outstanding. At December
31, 2017, the directors declare a $6,000 cash dividend. Prepare
the entry to record the declaration of the dividend.
Cash Dividends 6,000
Dividends Payable 6,000
Preferred Dividends: 1,000 shares x $100 par x 8% = $8,000
ALLOCATING CASH DIVIDENDS
LO 1
10. 14-10
2017 2018
Dividends declared 6,000
$
Dividends in arrears
Allocation to preferred 6,000
Remainder to common -
$
* 1,000 shares x $100 par x 8% = $8,000
*
** 2017 Pfd. dividends $8,000 – declared $6,000 = $2,000
**
Illustration: At December 31, 2018, IBR declares a $50,000 cash
dividend. Show the allocation of dividends to each class of stock.
$ 50,000
2,000
8,000
$ 40,000
LO 1
ALLOCATING CASH DIVIDENDS
11. 14-11
Illustration: At December 31, 2018, IBR declares a $50,000 cash
dividend. Prepare the entry to record the declaration of the
dividend.
Cash Dividends 50,000
Dividends Payable 50,000
LO 1
ALLOCATING CASH DIVIDENDS
12. 14-12
Preferred stockholders are paid only this year’s dividend.
Preferred stockholders = $12,000 (2,000 x .06 x $100).
Common stockholders = $48,000 ($60,000 - $12,000).
LO 1
DO IT!
Dividends on Preferred and Common
Stock
1
MasterMind Corporation has 2,000 shares of 6%, $100 par value
preferred stock outstanding at December 31, 2017. At December 31,
2017, the company declared a $60,000 cash dividend. Determine the
dividend paid to preferred stockholders and common stockholders
under each of the following scenarios.
1. The preferred stock is noncumulative, and the company has not
missed any dividends in previous years.
Solution
13. 14-13
Past unpaid dividends do not have to be paid.
Preferred stockholders = $12,000 (2,000 x .06 x $100).
Common stockholders = $48,000 ($60,000 - $12,000).
LO 1
MasterMind Corporation has 2,000 shares of 6%, $100 par value
preferred stock outstanding at December 31, 2017. At December 31,
2017, the company declared a $60,000 cash dividend. Determine the
dividend paid to preferred stockholders and common stockholders
under each of the following scenarios.
2. The preferred stock is noncumulative, and the company did not pay
a dividend in each of the two previous years.
Solution
DO IT!
Dividends on Preferred and Common
Stock
1
14. 14-14
Dividends that have been missed (dividends in arrears) must be paid.
Preferred stockholders = $36,000 (3 x 2,000 x .06 x $100).
Common stockholders = $24,000 ($60,000 - $36,000).
LO 1
MasterMind Corporation has 2,000 shares of 6%, $100 par value
preferred stock outstanding at December 31, 2017. At December 31,
2017, the company declared a $60,000 cash dividend. Determine the
dividend paid to preferred stockholders and common stockholders
under each of the following scenarios.
3. The preferred stock is cumulative, and the company did not pay a
dividend in each of the two previous years.
Solution
DO IT!
Dividends on Preferred and Common
Stock
1
15. 14-15
A pro rata (proportional to ownership) distribution of the
corporation’s own stock to stockholders.
Reasons why corporations issue stock dividends:
1. Satisfy stockholders’ dividend expectations without
spending cash.
2. Increase marketability of the corporation’s stock.
3. Emphasize a portion of stockholders’ equity has been
permanently reinvested in the business.
Stock Dividends
LO 2
LEARNING
OBJECTIVE
Explain how to account for stock dividends
and splits.
2
16. 14-16
Small stock dividend (less than 20–25% of the
corporation’s issued stock, recorded at fair market value)
Large stock dividend (greater than 20–25% of issued stock,
recorded at par value)
* Accounting based on the assumption that a small stock dividend will
have little effect on the market price of the outstanding shares.
*
Stock Dividends
LO 2
17. 14-17
Illustration: Medland Corporation declares a 10% stock dividend on
its 50,000 shares of $10 par value common stock. The current fair
market value of its stock is $15 per share. Record the entry on the
declaration date:
Stock Dividends (50,000 x 10% x $15) 75,000
Common Stock Dividends Distributable 50,000
Paid-in Capital in Excess of Par—Common 25,000
Illustration 14-4
Statement Presentation
ENRTIES FOR STOCK DIVIDENDS
LO 2
18. 14-18
Illustration: Medland Corporation declares a 10% stock dividend on
its 50,000 shares of $10 par value common stock. The current fair
market value of its stock is $15 per share. Record the entry on the
declaration date:
Stock Dividends (50,000 x 10% x $15) 75,000
Common Stock Dividends Distributable 50,000
Paid-in Capital in Excess of Par—Common 25,000
Common Stock Dividends Distributable 50,000
Common Stock 50,000
Record the journal entry when Medland issues the dividend shares.
LO 2
ENRTIES FOR STOCK DIVIDENDS
20. 14-20
Which of the following statements about small stock dividends is
true?
a. A debit to Stock Dividends for the par value of the shares
issued should be made.
b. A small stock dividend decreases total stockholders’
equity.
c. Market value per share should be assigned to the
dividend shares.
d. A small stock dividend ordinarily will have an effect on par
value per share of stock.
Question
Stock Dividends
LO 2
21. 14-21
In the stockholders’ equity section, Common Stock Dividends
Distributable is reported as a(n):
a. deduction from total paid-in capital and retained earnings.
b. current liability.
c. deduction from retained earnings.
d. addition to capital stock.
Question
Stock Dividends
LO 2
22. 14-22
Stock Splits
Issuance of additional shares to stockholders according to
their percentage ownership.
Reduction in the par or stated value per share.
Increase in number of shares outstanding.
Reduces the market value of shares.
No journal entry recorded.
Helpful Hint
A stock split changes the
par value per share but
does not affect any
balances in stockholders’
equity.
LO 2
24. 14-24
Effects for Medland Corporation, assuming that it splits its
50,000 shares of common stock on a 2-for-1 basis.
Illustration 14-7
Stock Splits
LO 2
25. 14-25 LO 2
Investor Insight Berkshire Hathaway
A No-Split Philosophy
Warren Buffett’s company, Berkshire Hathaway, has two classes of
shares. Until recently, the company had never split either class of stock.
As a result, the class A stock had a market price of$97,000 and the class
B sold for about $3,200 per share. Because the price per share is so high,
the stock does not trade as frequently as the stock of other companies.
Buffett has always opposed stock splits because he feels that a lower
stock price attracts short-term investors. He appears to be correct. For
example, while more than 6 million shares of IBM are exchanged on the
average day, only about 1,000 class A shares of Berkshire are traded.
Despite Buffett’s aversion to splits, in order to accomplish a recent
acquisition, Berkshire decided to split its class B shares 50 to 1.
Source: Scott Patterson, “Berkshire Nears Smaller Baby B’s,” Wall Street Journal
Online (January 19, 2010).
26. 14-26
DO IT! Stock Dividends and Stock Splits
2
Sing CD Company has had five years of record earnings. Due to
this success, the market price of its 500,000 shares of $2 par value
common stock has tripled from $15 per share to $45. During this
period, paid-in capital remained the same at $2,000,000. Retained
earnings increased from $1,500,000 to $10,000,000. President Joan
Elbert is considering either a 10% stock dividend or a 2-for-1 stock
split. She asks you to show the before-and-after effects of each
option on retained earnings, total stockholders’ equity, and par value
per share.
LO 2
27. 14-27
DO IT! Stock Dividends and Stock Splits
2
Sing CD Company has had five years of record earnings. Due to
this success, the market price of its 500,000 shares of $2 par value
common stock has tripled from $15 per share to $45. President
Joan Elbert is considering either a 10% stock dividend or a 2-for-1
stock split.
LO 2
28. 14-28 LO 3
Retained earnings is net income that a company retains in
the business.
Part of the stockholders’ claim on the total assets of the
corporation.
Debit balance in Retained Earnings is identified as a
deficit.
LEARNING
OBJECTIVE
Prepare and analyze a comprehensive
stockholders’ equity section.
3
Illustration 14-10
Stockholders’ equity
with deficit
29. 14-29
Restrictions can result from:
1. Legal restrictions.
2. Contractual restrictions.
3. Voluntary restrictions.
RETAINED EARNINGS RESTRICTIONS
Retained Earnings
Illustration 14-11
Disclosure of restriction
LO 3
30. 14-30
Correction of an error in previously issued financial
statements.
Result from:
► mathematical mistakes.
► mistakes in application of accounting principles.
► oversight or misuse of facts.
Adjustment made to the beginning balance of retained
earnings.
PRIOR PERIOD ADJUSTMENTS
Retained Earnings
LO 3
31. 14-31
Balance, January 1 1,050,000
$
Net income 360,000
Dividends (300,000)
Balance, December 31 1,110,000
$
For the Year Ended December 31, 2017
Statement of Retained Earnings
Woods, Inc.
Before issuing the report for the year ended December 31, 2017, you discover a
$50,000 error (net of tax) that caused the 2016 inventory to be overstated
(overstated inventory caused COGS to be lower and thus net income to be higher in
2016. Would this discovery have any impact on the reporting of the Statement of
Retained Earnings for 2017?
RETAINED EARNINGS STATEMENT
LO 3
32. 14-32
Balance, January 1, as previously reported 1,050,000
$
Prior period adjustment - error correction (50,000)
Balance, January 1, as restated 1,000,000
Net income 360,000
Dividends (300,000)
Balance, December 31 1,060,000
$
For the Year Ended December 31, 2017
Statement of Retained Earnings
Woods, Inc.
Advance slide in slide show to reveal answer. LO 3
RETAINED EARNINGS STATEMENT
33. 14-33
Debits and Credits to Retained Earnings
Illustration 14-13
LO 3
RETAINED EARNINGS STATEMENT
35. 14-35
All but one of the following is reported in a retained
earnings statement. The exception is:
a. cash and stock dividends.
b. net income and net loss.
c. some disposals of treasury stock below cost.
d. sales of treasury stock above cost.
Question
LO 3
RETAINED EARNINGS STATEMENT
37. 14-37
Ratio shows how many dollars of net income the company earned
for each dollar invested by the common stockholders.
Statement Presentation and Analysis
ANALYSIS
To illustrate, Walt Disney Company’s beginning-of-the-year and end-
of-the-year common stockholders’ equity were $31,820 and $30,753
million, respectively. Its net income was $4,687 million, and no
preferred stock was outstanding.
Illustration 14-16
LO 3
38. 14-38
DO IT! Retained Earnings Statement
3
Vega Corporation has retained earnings of $5,130,000 on
January 1, 2017. During the year, Vega earned $2,000,000 of
net income. It declared and paid a $250,000 cash dividend. In
2017, Vega recorded an adjustment of $180,000 due to the
understatement (from a mathematical error) of 2016
depreciation expense. Prepare a retained earnings statement
for 2017.
LO 3
39. 14-39
Prepare a retained earnings statement for 2017.
Advance slide in slide show to reveal the missing amounts. LO 3
DO IT! Retained Earnings Statement
3
41. 14-41
Net Income minus
Preferred Dividends
Earnings Per
Share
=
Weighted-Average Common
Shares Outstanding
Ratio indicates the net income
earned by each share of
outstanding common stock.
Income Statement Analysis
EPS AND PREFERRED DIVIDENDS
LO 4
42. 14-42
The income statement for Nadeen, Inc. shows income before
income taxes $700,000, income tax expense $210,000, and
net income $490,000. If Nadeen has 100,000 shares of
common stock outstanding throughout the year, earnings per
share is:
a. $7.00.
b. $4.90.
c. $2.10.
d. No correct answer is given.
Question
($490,000 / 100,000 = $4.90)
Income Statement Analysis
LO 4
46. 14-46
Key Points
Similarities
The accounting related to prior period adjustment is essentially the
same under IFRS and GAAP.
The stockholders’ equity section is essentially the same under IFRS
and GAAP. However, terminology used to describe certain
components is often different. These differences are discussed in
Chapter 13.
LEARNING
OBJECTIVE
Compare the accounting for dividends, retained
earnings, and income reporting under GAAP and IFRS.
5
LO 5
A Look at IFRS
47. 14-47
Key Points
The income statement using IFRS is called the statement of
comprehensive income. A statement of comprehensive income is
presented in a one- or two-statement format. The single-statement
approach includes all items of income and expense, as well as each
component of other comprehensive income or loss by its individual
characteristic. In the two-statement approach, a traditional income
statement is prepared. It is then followed by a statement of
comprehensive income, which starts with net income or loss and
then adds other comprehensive income or loss items. Regardless of
which approach is reported, income tax expense is required to be
reported.
The computations related to earnings per share are essentially the
same under IFRS and GAAP.
LO 5
A Look at IFRS
48. 14-48
Key Points
Differences
Under IFRS, the term reserves is used to describe all equity
accounts other than those arising from contributed (paid-in) capital.
This would include, for example, reserves related to retained
earnings, asset revaluations, and fair value differences.
IFRS often uses terms such as retained profits or accumulated profit
or loss to describe retained earnings. The term retained earnings is
also often used.
Equity is given various descriptions under IFRS, such as
shareholders’ equity, owners’ equity, capital and reserves, and share
holders’ funds.
LO 5
A Look at IFRS
49. 14-49
Looking to the Future
The IASB and the FASB are currently working on a project related to
financial statement presentation. An important part of this study is to
determine whether certain line items, subtotals, and totals should be clearly
defined and required to be displayed in the financial statements. For
example, it is likely that the statement of stockholders’ equity and its
presentation will be examined closely.
Both the IASB and FASB are working toward convergence of any
remaining differences related to earnings per share computations.
LO 5
A Look at IFRS
50. 14-50
IFRS Self-Test Questions
The basic accounting for cash dividends and stock dividends:
a) is different under IFRS versus GAAP.
b) is the same under IFRS and GAAP.
c) differs only for the accounting for cash dividends between
GAAP and IFRS.
d) differs only for the accounting for stock dividends between
GAAP and IFRS.
LO 5
A Look at IFRS
51. 14-51
Under IFRS, a statement of comprehensive income must
include:
a) accounts payable.
b) income tax expense.
c) retained earnings.
d) preference stock.
IFRS Self-Test Questions
LO 5
A Look at IFRS
52. 14-52
A Look at IFRS
IFRS Self-Test Questions
Earnings per share computations related to IFRS and GAAP:
a) are essentially similar.
b) result in an amount referred to as earnings per share.
c) must deduct preferred (preference) dividends when
computing earnings per share.
d) All of the answer choices are correct.
LO 5
A Look at IFRS