Reporting and Interpreting Owners’ Equity
Corporations rely on shareholder investments in the company to finance much of their operations. Therefore, it is important that the company report positive operating results to attract investors. Often, stock prices rise or fall based on how closely a company’s earnings match projections each quarter.
In your opinion, is this emphasis on quarterly results helpful or damaging to a company? Use specific examples to support your position.
A company publishes quarterly reports to show the results of its performance and it is also mandated by the SEC for registered companies.
The financial statements for a company included the following information:
|Dividends Declared and Paid||
The common stock was sold at a price of $30 per share.
Complete the following:
What is the amount of capital in excess of par?
What was the amount of retained earnings at the beginning of the year?
How many shares are in treasury stock (Treasury shares)?
Compute earnings per share.
Suppose a company had the following stock outstanding and retained earnings on December 31, 2011.
|Common Stock (par $7; outstanding, 22,000 shares)||
|Preferred Stock, 10% (par $10; outstanding, 6,000 shares)||
Suppose that the preferred stock is noncumulative, and the total amount of dividends is $29,000.
Compute the amounts of dividends, in total and per share, that would be payable to each class of stockholders.
At December 31st, 2011, the records at a corporation provided the following selected and incomplete data:
|Common stock (par $1; no changes during the year)|
|Shares authorized, 3,000,000|
|Shares issued, ?: issue price $65 per share|
|Shares held as treasury stock, 85,000 shares, cost $40 per share|
|Net income, $3,700,000|
|Common stock account, $1,400,000|
|Dividends declared and paid; $2 per share.|
|Retained Earnings balance, January 1, 2011, $74,700,000|
Find the following:
the shares issued
the shared outstanding
the balance in the Capital in Excess of par account
the EPS on net income
The total dividends paid on common stock during 2011
The amount of treasury stock
On August 31, 2010, a company purchased 10,000 shares of stock for $30 per share. Management recorded the stock in the securities available for the sale portfolio. The following information pertains to the price per share of stock:
Prepare journal entries for the investments in SAS and the Net Unrealized Gains/Losses for each date given. Then compute the balance in the Net Unrealized Gains/Losses.
Survivor Company was formed on January 1, 2008 by selling and issuing 20,000 shares of common stock at $15 per share. On December 1, 2009, the company declared a cash dividend of $10,000 which will be paid in cash on January 15, 2010. The annual accounting period ends December 31.
A. Give the journal entry to record the sale and issuance of the common stock on January 1, 2008, for each of the following independent assumptions:
B. Give the journal entry to record the dividend declaration on December 1, 2009.
C. Show the journal entry to record payment of the dividend on January 15, 2010.
On January 1, 2009, Heitzman Company purchased the following shares as a long-term investment in available-for-sale securities:
Corporation Shares Percent Outstanding Cost per Share
Maars 10,000 common (no par) 5% $25
Nassif 2,000 preferred (par $10) 2% $50
The market value of the stocks subsequently were as follows:
– Dec. 31, 2009 Dec.31, 2010
Maars Corporation common stock $24.00 $27.50
Nassif Corporation preferred stock $51.00 $50.50
Calculate the balance in the account, “Allowance to Adjust Long-term Investments to Market,” on
A. December 31, 2009 and
B. December 31, 2010.