On January 1 2018, ACI Ltd. had 5,80,000 shares of common stock outstanding . During 2018, it had the following transactions that affected the common stock account: February-1 Issued 1,50,000 shares. March-1 Issued a 20% stock dividend. May-1 Acquired 1,00,000 shares of treasury stock. June-1 Issued a 4 for 1 stock split. October-1 Reissued 60,000 shares of treasury stock. Requirements: i) Determine the weighted average number of shares outstanding as of December 31, 2018.[01] ii) Assume that ACI Ltd. earned net income Tk. 35,00,000 during 2018. In addition it had 1,00,000 shares of 10% ,Tk100 per nonconvertible, noncumulative preferred stock outstanding for the entire year. Because of liquidity considerations, however, the company did not declare and pay a preferred dividend in 2018. Compute earning per shares for 2018, using the weighted average number of shares. iii) Assume the same fact as in part (ii), except that the preferred stock was cumulative. Compute earning per shares for 2018.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
On January 1 2018, ACI Ltd. had 5,80,000 shares of common stock outstanding . During
2018, it had the following transactions that affected the common stock account:
February-1 Issued 1,50,000 shares.
March-1 Issued a 20% stock dividend.
May-1 Acquired 1,00,000 shares of
June-1 Issued a 4 for 1 stock split.
October-1 Reissued 60,000 shares of treasury stock.
Requirements:
i) Determine the weighted average number of shares outstanding as of December 31,
2018.[01]
ii) Assume that ACI Ltd. earned net income Tk. 35,00,000 during 2018. In addition it had
1,00,000 shares of 10% ,Tk100 per nonconvertible, noncumulative preferred stock
outstanding for the entire year. Because of liquidity considerations, however, the
company did not declare and pay a preferred dividend in 2018. Compute earning per
shares for 2018, using the weighted average number of shares.
iii) Assume the same fact as in part (ii), except that the preferred stock was cumulative.
Compute earning per shares for 2018.
iv) Assume the same facts as in part (ii), except that net income included an extraordinary
gain of Tk.8,50,000 and a loss from discontinue operations of Tk. 3,30,000. Both items
are net of applicable income tax. Compute earning per shares for 2018.
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