On January 1, 2017, Vahsholtz Corporation purchased 1,100 shares of treasury sto
ID: 2420033 • Letter: O
Question
On January 1, 2017, Vahsholtz Corporation purchased 1,100 shares of treasury stock. Other information regarding Vahsholtz Corporation is provided as follows.
2016
2017
(a)
Compute return on common stockholders’ equity for each year. (Round return on common stockholders' to 1 decimal place, e.g. 10.5.)
2016
2017
2016
2017
Net income $195,000 $220,000 Dividends on preferred stock $ 35,000 $ 35,000 Dividends on common stock $ 21,000 $ 26,000 Weighted-average number of common shares outstanding 12,000 10,900 Common stockholders’ equity beginning of year $598,000 $688,000 Common stockholders’ equity end of year $688,000 $758,000Explanation / Answer
Return on common stockholder's equity = Net income - preferred dividends
Average stockholders equity
2016 = (195,000-35,000)/643,000
=24.88%
2017 = (220,000 - 35,000)/723,000
=25.59%
Return on common stockholder's equity = Net income - preferred dividends
Average stockholders equity
2016 = (195,000-35,000)/643,000
=24.88%
2017 = (220,000 - 35,000)/723,000
=25.59%