Question: Comprehensive problem find missing amounts, net income, issue price, & dividends; interpret stock dividend and split Bacon, Inc., has the following owner's equity section in its May 31, 2009, comparative balance sheets:
|
|
May 31, 2009
|
April 30, 2009
|
|
Paid-In capital:
Preferred stock, $120 par value, 8%, cumulative, 100,000 shares authorized 80,000 shares issued and outstanding.................
|
$9,600,000
|
$9,600,000
|
|
Common stock, $6 par value, 600,000 shares authorized, 400,000 and 380,000 shares issued, respectively...................................
|
?
|
2,280,000
|
|
Additional paid-in capital..............................................................
|
16,800,000
|
16,480,000
|
|
Retained earnings ..............................................................................
|
13,900,000
|
13,624,000
|
|
Less: Treasury common stock, at cost; 18,000 shares and 17,000 shares, respectively .............................................................................................
|
(1,660,000)
|
(1,632,000)
|
|
Total stockholders' equity ....................................................................
|
mce_markernbsp; ?
|
$40,352,000
|
Required:
[A] Compute the amount that should be shown on the balance sheet for common stock at May 31, 2009.
[B] The only transaction affecting additional paid-in capital during the month of May was the sale of additional common stock. At what rate per share were the additional shares sold?
[C] Find the average cost per share of the common stock purchased for the treasury during the month?
[D] During May, dividends on preferred stock equal to one-half of the 2009 dividend requirement were declared and paid. There were no common dividends declared or paid in May. Compute net income for May.
[E] Suppose that on June 1 the board of directors declared a cash dividend of $.21 per share on the outstanding shares of common. The dividend will be payable on July 15 to stockholders of record on June 15.
(a) Compute the total amount of the dividend.
(b) Describe the impact this action will have on the June 30 balance sheet and on the income statement for June.
[F] Suppose that on June 1 the market value of the common stock was $36 per share and that the board of directors declared a 6 percent stock dividend on the issued shares of common stock. Use the horizontal model [or write the entry] to show the issuance of the stock dividend.
[G] Suppose that instead of the stock dividend described in f, the board of directors authorized a 2-for-1 stock split on June 1 when the market rate of the common stock was $36 per share.
(a) What will be the par price, & how many shares of common stock will be authorized after the split?
(b) Calculate the market price per share of common stock after the split?
(c) How many shares of common stock will be in the treasury after the split?
[H] By how much will total stockholders' equity change as a result of;
(a) The stock dividend explained in part f?
(b) The stock split explained in part g?