MGAB02H3 Study Guide - Quiz Guide: Authorised Capital, Retained Earnings, Issued Shares
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Helifex , Inc. began operations in 2010 and has the following Capital Stock: | |||||
Helifex , Inc. Capital Stock: | |||||
Preferred Stock: | # Shares | Stated Dividend Rate | Par value | ||
Authorized shares of cumulative, non-participatory preferred stock | 80,000 | 6% | $10 | ||
Issued shares of prefered stock | 60,000 | ||||
Outstanding shares of preferred stock | 30,000 | ||||
Common Stock: | # Shares | ||||
Authorized shares of $1 par value common stock | 50,000 | ||||
Issued shares of common stock | 40,000 | ||||
Outstanding shares of common stock | 10,000 | ||||
Required: | |||||
a) | Compute the amount of Preferred Stock dividends. | ||||
b) | On January 1, 2017, the Board of Directors declared dividends of | $ 35,000 | |||
Prepare the journal entry for the declaration of the dividends. | |||||
c) | On March 31, 2017, the dividends are disbursed to stockholders of record. Determine the allocation of dividends to Preferred and Common Stockholders. | ||||
d) | The Board of directors did not declare dividends during 2018. Determine the allocation of dividends to Preferred and Common Stockholders. | ||||
Total dividends for Preferred Stockholders | |||||
Total dividends for Common Stockholders | |||||
e) | On June 8, 2019 the Board of Directors declared dividends of | $110,000 | |||
Determine the allocation of dividends to Preferred and Common Stockholders. | |||||
f) | The following year, on November 30, 2020, the board declared dividends of | $100,000 | |||
Determine the allocation of dividends to Preferred and Common stockholders. | |||||
g) | Explain the advantages and disadvantages of investing in preferred stock. |
Use the following information for Midge Inc. to complete the requirements below.
Foran Inc. Shareholder’s Equity As at Dec. 31, 2016 | |
Common Shares, no-par; 500,000 shares authorized; 80,000 issued and outstanding | $600,000 |
Retained Earnings | 1,000,000 |
Total Shareholders’ Equity | $1,600,000 |
2017 Transactions:
Mar | 3 | Issued 5,000 common shares at $20 per share. |
June | 11 | Declared a cash dividend of $0.25 per share to common shareholders of record on June 25, payable on July 6. |
Aug. | 21 | Declared a 5% stock dividend to common shareholders of record on September 5, distributable on September 20. The shares were trading for $22 a share on August 21, $24 on September 5, and $26 on September 20. |
Nov. | 1 | Issued 3,000 common shares at $25 per share. |
Dec. | 20 | Declared a cash dividend of $0.30 per share to common shareholders of record on December 31, payable on January 10. |
2017 Net Income: $217,610
Required
A)
i) Record the above transactions for 2017. (Note: Closing entries are not required.)
ii) Prepare the Shareholders’ Equity section of their financial statements as at Dec. 31, 2017.
B) Feng Corporation has 10,000 Common shares Issued when it announces a 3-for-1 split. Before the split, the shares were trading for $120 per share.
i) After the split, how many shares will be Issued?
ii) How should Feng Corporation record the share split?
iii) Just following the split, what will be the likely share price?
Omit all general journal entryexplanations.
Ensure to include correct dollar signs, underlines &double underlines.
Question 1:
On December 31, 2014, Frick Incorporated, had the followingbalances (all balances are normal):
Accounts | Amount |
Preferred Stock, ($100 par value, 5% noncumulative,50,000 shares authorized, 10,000 shares issued andoutstanding) | $1,000,000 |
Common Stock ($10 par value, 200,000 shares authorized,100,000 shares issued and outstanding) | $1,000,000 |
Paid-in Capital in Excess of par, Common | 150,000 |
Retained Earnings | 700,000 |
The following events occurred during 2014 and were notrecorded:
a. On January 1, Frick declared a 5% stock dividend on its commonstock when the market value of the common stock was $15 per share.Stock dividends were distributed on January 31 to shareholders asof January 25.
b. On February 15, Frick reacquired 1,000 shares of common stockfor $20 each.
c. On March 31, Frick reissued 250 shares of treasury stock for $25each.
d. On July 1, Frick reissued 500 shares of treasury stock for $16each.
e. On October 1, Frick declared full year dividends for preferredstock and $1.50 cash dividends for outstanding shares and paidshareholders on October 15.
f. One December 15, Frick split common stock 2 shares for 1.
g. Net Income for 2014 was $275,000.
Requirements:
a. Prepare journal entries for the transactionslisted above.
b. Prepare a Stockholders' section of aclassified balance sheet as of December 31, 2014.