E 13-8
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Stockholders’ Equity |
|
|
Paid-in capital: |
|
|
Preferred stock, 5%, $20 par, 20,000 shares authorized, |
|
|
5,000 shares issued |
$100,000 |
|
Paid-in capital in excess of par—preferred |
88,000 |
|
Common stock, no-par, $1 stated value, 100,000 shares |
|
|
authorized and issued |
100,000 |
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Total paid-in capital |
288,000 |
|
Retained earnings |
119,000 |
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Total stockholders’ equity |
$407,000 |
(10-15 min.)
E 13-9Preferred stock is cumulative because it is not specifically designated as noncumulative.
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PREFERRED |
COMMON |
TOTAL |
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|
20X1—Total dividend |
$10,000 |
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Preferred dividends |
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($200,000 ´ .08 = $16,000; |
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unable to pay the full amount) |
$10,000 |
-0- |
$10,000 |
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20X2—Total dividend |
$60,000 |
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Preferred dividends in |
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arrears for 20X1: |
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($16,000 ! $10,000) |
$ 6,000 |
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Preferred dividends for |
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current year |
16,000 |
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Total preferred dividends |
22,000 |
$22,000 |
|
|
Remainder to common |
$38,000 |
38,000 |
|
|
________ |
________ |
________ |
|
|
Total dividends allocated |
$22,000 |
$38,000 |
$60,000 |
(15-20 min.)
E 13-10|
PREFERRED |
COMMON |
TOTAL |
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|
SERIES A |
SERIES B |
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20X4—Total dividend |
$ -0- |
$ -0- |
$ -0- |
$ -0- |
|
20X5—Total dividend |
$1,100,000 |
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Preferred dividends |
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in arrears for 20X4: |
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Series A preferred |
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(50,000 ´ $.40) |
$20,000 |
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Series B preferred |
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(370,000 ´ $1.30) |
$481,000 |
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Total preferred |
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dividends in |
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arrears |
501,000 |
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Remainder |
599,000 |
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Current year: |
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Series A preferred |
20,000 |
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Series B preferred |
481,000 |
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Total preferred |
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dividends for the |
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current year |
501,000 |
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Remainder |
98,000 |
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Common |
98,000 |
98,000 |
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Remainder |
_______ |
_______ |
_______ |
-0- |
|
Totals |
$40,000 |
$962,000 |
$98,000 |
$1,100,000 |
(10-15 min.)
E 13-11|
Book value per share of preferred and common stock: |
|
|
Preferred: |
|
|
Liquidation value |
$ 6,000 |
|
Book value per share ($6,000 / 100 shares) |
$60.00 |
|
Common: |
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Stockholders equity allocated to common |
|
|
($226,800 ! $6,000) |
$220,800 |
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Book value per share ($220,800) / 10,000 shares) |
$22.08 |
(10-15 min.)
E 13-12|
Book value per share of preferred and common stock: |
|
|
Preferred: |
|
|
Liquidation value |
$ 6,000 |
|
Dividends in arrears ($4,800 ´ .06 ´ 3) |
864 |
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Total preferred equity |
$ 6,864 |
|
Book value per share ($6,864 / 100 shares) |
$68.64 |
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Common: |
|
|
Total stockholders’ equity |
$226,800 |
|
Less: Total preferred equity |
(6,864 ) |
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Total common equity |
$219,936 |
|
Book value per share ($219,936 / 10,000 shares) |
$21.99 |
(10-15 min.)
E 13-13|
Rate of Return on assets |
= |
Net income + Interest expense |
= |
$12,000,000 + $17,400,000 |
= |
$29,400,000 |
= |
.091 |
|
Average total assets |
($326,000,000 + $317,000,000) / 2 |
$321,500,000 |
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Rate of return on common |
= |
Net income ! preferred dividends |
= |
$12,000,000 ! (100,000 ´ $1.30) |
= |
$11,870,000 |
= |
.074 |
|
stockholders' equity |
Average common stockholders' equity |
($164,000,000 + $157,000,000) / 2 |
$160,500,000 |
These profitability measures suggest weakness because Weimeyer’s 7.4% return on stockholders’ equity is low, and it is even less than the company’s 9.1% return on assets.
(10-15 min.)
E 13-14Req. 1
All amounts in millions
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Income Tax Expense ($130,000 ´ .40) |
52 |
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Income Tax Payable ($100,000 ´ .40) |
40 |
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Deferred Tax Liability ($30,000 ´ .40) |
12 |
Req. 2
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Income statement: |
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|
Income before income tax |
$130 |
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Income tax expense |
52 |
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Net income |
$ 78 |
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Balance sheet: |
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Current liabilities: |
|
|
Income tax payable |
$ 40 |
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Long-term liabilities: |
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Deferred tax liability |
$ 12 |
(15-20 min.)
E 13-15Req. 1
|
Millions |
|||
|
a. |
Income Summary |
5,377 |
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Retained Earnings |
5,377 |
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Closed net income to Retained Earnings. |
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b. |
Retained Earnings |
989 |
|
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Dividends Payable |
989 |
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Declared a cash dividend. |
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Dividends Payable |
989 |
||
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Cash |
989 |
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Paid a cash dividend. |
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c. |
Cash |
280 |
|
|
Common Stock ($446 ! $445) |
1 |
||
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Capital in Excess of Par Value ($714 ! $435) |
279 |
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Issued stock. |
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(continued)
E 13-15Req. 2
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Millions |
|
|
Common stock, Jan. 31, 19X9 |
$ 445 |
|
Issuance of stock for cash |
1 |
|
Common stock, Jan. 31, 20X0 |
$ 446 |
|
Capital in excess of par value, Jan. 31, 19X9 |
$ 435 |
|
Issuance of stock for cash |
279 |
|
Capital in excess of par value, Jan. 31, 20X0 |
$ 714 |
|
Retained earnings, Jan. 31, 19X9 |
$20,741 |
|
Net income |
5,377 |
|
Cash dividends |
(989 ) |
|
Retained earnings, Jan. 31, 20X0 |
$25,129 |