Cash versus stock dividend Milwaukee Tool has the following stockholders' equity account. The firm's common stock currently sells for $4.14 per share.Preferred stockCommon stock (300,000 shares at $0.93 par)Paid-in capital in excess of parRetained earningsTotal stockholders' equitya. Show the effects on the firm of a cash dividend of $0.20 per share.b. Show the effects on the firm of a 1% stock dividend.c. Compare the effects in parts a and b. What are the significant differences between the two methods of paying dividends?a. The balance in preferred stock after the $0.20 cash dividend is $(Round to the nearest dollar.)$ 99,000279,000184,000390,000$952,000

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Determining Cash Dividends to Preferred and Common ShareholdersSinclair Company has outstanding 28,000 shares of $50 par value, 6% cumulative preferred stock and 70,000 shares of $10 par value common stock. The company declares and pays cash dividends amounting to $196,000.a. If there are no preferred dividends in arrears, how much in total dividends, and in dividends per share, does Sinclair pay to each class of stock? Total Dividends Dividends per Share Preferred shareholders: Answer Answer Common shareholders: Answer Answer b. If there are one year’s dividends in arrears on the preferred stock, how much in total dividends, and in dividends per share, does Sinclair pay to each class of stock? Total Dividends Dividends per Share Preferred shareholders: Answer Answer Common shareholders: Answer Answer
Common Stockholders' Profitability Analysis A company reports the following: Net income $320,000 Preferred dividends 12,800 Average stockholders' equity 2,644,628 Average common stockholders' equity 1,484,058 Determine (a) the return on stockholders’ equity and (b) the return on common stockholders’ equity. If required, round your answers to one decimal place. a. Return on Stockholders' Equity fill in the blank % b. Return on Common Stockholders’ Equity fill in the blank %
The total dividends to be given to common stock, if preferred stock is cumulative and fully participating, would be? The total dividends to be given to preferred stock, if preferred stock is cumulative and fully participating, would be?
Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $64.13. The firm just recently paid a dividend of $3.99. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.03. After underpricing and flotation costs, the firm expects to net $55.79 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth rate, what dividend would you expect the company to pay next year? b. Determine the net proceeds, N₁, that the firm will actually receive. c. Using the constant-growth valuation model, determine the required return on the company's stock, rs, which should equal the cost of retained earnings, rr. d. Using the constant-growth valuation model, determine the cost of new common stock, In- C--- a. The average annual dividend growth rate over the past 5 years is %. (Round to two decimal places.)
Calculate the preferred and common dividend per share (in $) for the company. (If there is no answer, enter NONE.) Company CommonStock Shares Preferred Stock Dividend Declared Arrears PreferredDiv./Share CommonDiv./Share Shares Div. or Par Cum. a personal electronics manufacturer 9,000,000 1,000,000 $100 6% no $5,000,000 none $
Assume that a company has the following information: Common Stock Information: # of shares issued and outstanding Par value per share 20,000 $9 Stockholders' Equity section of the Balance Sheet: Common Stock $180,000 Additional Paid in Capital Retained Earnings Total Stockholders' Equity $3,000,000 $4,820,000 $8,000,000 The company has the option of EITHER announcing a 3:1 stock split OR declaring a 200% stock dividend. Fill in the blanks below to show the stockholders' equity balances under each of these options. After After Current 3:1 200% Situation Stock Split Stock Dividend Common Stock Information: # of shares issued and outstanding 20,000 Par value per share $9 Stockholders' Equity section of the Balance Sheet: Common Stock $180,000 Additional Paid in Capital $3,000,000 Retained Earnings $4,820,000 Total Stockholders' Equity $8,000,000 II IIII
2
Stockholder Profitability Ratios The following information pertains to Montague Corporation: Net income $60,000 Average common equity $1,500,000 Preferred dividends $7,500 Average common shares outstanding 100,000 Required: Calculate the return on common equity and the earnings per share. Round your answers to two decimal places. Return on common equity fill in the blank 1 % Earnings per share $fill in the blank 2 per share
Stock Dividend Comparison Although Oriole Company has enough retained earnings legally to declare a dividend, its working capital is low. The board of directors is considering a stock dividend instead of a cash dividend. The common stock is currently selling at $33 share. The following is Oriole's current shareholders' equity: Common stock, $10 par $500,000 1,000,000 Additional paid-in capital on common stock Total contributed capital $1,500,000 Retained earnings 1,200,000 $2,700,000 Total shareholders' equity Required: 1. Assuming a 15% stock dividend is declared and issued, prepare the shareholders' equity section immediately after the date of issuance. Oriole Company Stockholders' Equity Common stock, $10 par Additional paid-in capital on common stock Total contributed capital Retained earnings Total shareholders' equity 2. Assuming, instead, that a 30% stock dividend is declared and issued, prepare the shareholders' equity section immediately after the date of issuance. Oriole…
Sturdy Stone Tools, Inc., announced a 100 percent stock dividend. Determine the impact (increase,decrease, no change) of this dividend on the following:1. Total assets.2. Total liabilities.3. Common stock.4. Total stockholders’ equity.5. Market value per share of common stock.
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The following is the information on preferred stock issued by Huntington Power Co. Calculate the cost of preferred stock for the firm. Preferred Stock: Selling for $98. Dividends are $7 a share. a. 6.12% b. 5.45% c. 7.14% d. 9.57%

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