Stockholders\' Equity (December 31, 2015) Common stock-$6 par value, 50,000 shar
ID: 2486323 • Letter: S
Question
Stockholders' Equity (December 31, 2015) Common stock-$6 par value, 50,000 shares authorized, 35,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 210,000 170,000 340,000 Total stockholders' equity $720,000 Stockholders' Equity (December 31, 2016) Common stock-$6 par value, 50,000 shares authorized, 41,000 shares issued, 5,000 shares in treasury Paid-in capital in excess of par value, common stock Retained earnings ($50,000 restricted by treasury stock) $246,000 206,000 420,000 872,000 (50,000) Less cost of treasury stock Total stockholders' equity $822,000 The following transactions and events affected its equity during year 2016 Jan. 5 Declared a $0.40 per share cash dividend, date of record January 10. Mar. 20Purchased treasury stock for cash Apr. 5 Declared a $0.40 per share cash dividend, date of record April 10 July 5 Declared a $0.40 per share cash dividend, date of record July 10 July 31 Declared a 20% stock dividend when the stock's market value is $12 per share Aug. 14 Issued the stock dividend that was declared on July 31 Oct. 5 Declared a $0.40 per share cash dividend, date of record October 10.Explanation / Answer
Answer 1. Jan-05 Apr-05 Jul-05 Oct-05 Outstanding Common Shares Beginning Balance 35,000 35,000 35,000 35,000 Less: Treasury Stock (Mar 20) (5,000) (5,000) (5,000) Add: Dividend Shares (Aug 14) - 30000 Shares X 20% 6,000 Shares Outstanding 35,000 30,000 30,000 36,000 Answer 2. Jan-05 Apr-05 Jul-05 Oct-05 Cash Dividends per share 0.40 0.40 0.40 0.40 Shares Outstanding 35,000 30,000 30,000 36,000 Total Cash Dividends 14,000 12,000 12,000 14,400 Answer 3. Capitalization Amount - 6000 Shares X $12 72,000 Answer 4. Cost per Share - Treasury Stock 10 ($50000 / 5000 Shares) Answer 5. Net Income Earned during the Year Retained Earnings - Dec 31, 2016 420,000 Add; Cash dividends Paid 52,400 Add: Stock Dividend Paid 72,000 Total 544,400 Less: Retained Earnings - Jan 1, 2016 (340,000) Net Income Earned during the Year 204,400