- The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow. – 13 marks Stockholders’ Equity (January 1) Common stock—$4 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $ 160,000 Paid-in capital in excess of par value, common stock 120,000 Retained earnings 320,000 Total stockholders’ equity $ 600,000 Stockholders’ Equity (December 31) Common stock—$4 par value, 100,000 shares authorized, 47,400 shares issued, 3,000 shares in treasury $ 189,600 Paid-in capital in excess of par value, common stock 179,200 Retained earnings ($30,000 restricted by treasury stock) 400,000 768,800 Less cost of treasury stock (30,000) Total stockholders’ equity $ 738,800 The following transactions and events affected its equity during the year. January 5 Declared a $0.50 per share cash dividend, date of record January 10. March 20 Purchased treasury stock for cash. April 5 Declared a $0.50 per share cash dividend, date of record April 10. July 5 Declared a $0.50 per share cash dividend, date of record July 10. July 31 Declared a 20% stock dividend when the stock’s market value was $12 per share. August 14 Issued the stock dividend that was declared on July 31. October 5 Declared a $0.50 per share cash dividend, date of record October 10. Requirements: Provide a detailed answer showing all the computation. (13 marks) How many common shares are outstanding on each cash dividend date? 3 marks What is the total dollar amount for each of the four cash dividends? 2 What is the amount of retained earnings transferred to paid-in capital accounts (capitalized) for the stock dividend? 3 What is the per share cost of the treasury stock purchased? 2 How much net income did the company earn this year? 3

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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- The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow. – 13 marks

Stockholders’ Equity (January 1)
Common stock—$4 par value, 100,000 shares authorized, 40,000 shares issued and outstanding	$ 160,000
Paid-in capital in excess of par value, common stock	120,000
Retained earnings	320,000
Total stockholders’ equity	$ 600,000

Stockholders’ Equity (December 31)
Common stock—$4 par value, 100,000 shares authorized, 47,400 shares issued, 3,000 shares in treasury	$ 189,600
Paid-in capital in excess of par value, common stock	179,200
Retained earnings ($30,000 restricted by treasury stock)	400,000
	768,800
Less cost of treasury stock	(30,000)
Total stockholders’ equity	$ 738,800

The following transactions and events affected its equity during the year.

January 5	Declared a $0.50 per share cash dividend, date of record January 10.
March 20	Purchased treasury stock for cash.
April 5	Declared a $0.50 per share cash dividend, date of record April 10.
July 5	Declared a $0.50 per share cash dividend, date of record July 10.
July 31	Declared a 20% stock dividend when the stock’s market value was $12 per share.
August 14	Issued the stock dividend that was declared on July 31.
October 5	Declared a $0.50 per share cash dividend, date of record October 10.

Requirements: Provide a detailed answer showing all the computation. (13 marks)

How many common shares are outstanding on each cash dividend date? 3 marks
What is the total dollar amount for each of the four cash dividends? 2
What is the amount of retained earnings transferred to paid-in capital accounts (capitalized) for the stock dividend? 3
What is the per share cost of the treasury stock purchased? 2
How much net income did the company earn this year? 3

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