Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)

15th Edition

ISBN: 9780134476315

Author: Chad J. Zutter, Scott B. Smart

Publisher: PEARSON

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Textbook Question

Chapter 3, Problem 3.9P

Learning Goal 1

P3-9 Changes In stockholders’ equity Listed are the equity sections of balance sheets for years 2018 and 2019 as reported by Mountain Air Ski Resorts Inc. The overall value of stockholders’ equity has risen from $2,000,000 to $7,500,000. Use the statements to discover how and why that happened.

Mountain Air Ski Resorts Inc Balance Sheets (partial)

Stockholders’ equity	2018	2019
Common stock ($1.00 par)
Authorized: 5,000,000 shares
Outstanding: 1,500,000 shares 2019		$1,500,000
500.000 shares 2018	$ 500.000
Paid-in capital in excess of par	500,000	4,500,000
Retained earnings	1,000,000	1,500,000
Total stockholders’ equity	$2,000,000	$7,500,000

The company paid total dividends of $200,000 during fiscal2019.

a. What was Mountain Air’s net income for fiscal 2019?
b. How many new shares did the corporation issue and sell during the year?
c. At what average price per share did the new stock sold during 2019 sell?
d. At what price per share did Mountain Air’s original 500,000 shares sell?

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Chapter 3, Problem 3.8P

Chapter 3, Problem 3.10P

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Chapter 3 Solutions

Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)

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Solution Summary: The author calculates the net income for fiscal 2019 using the following formula: cTotal dividends paid_2019 =(1,500,000-500,000)

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