Survey Of Accounting
Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
Question
Book Icon
Chapter 8, Problem 25P

a)

To determine

Identify the par per share of the preferred stock.

a)

Expert Solution
Check Mark

Explanation of Solution

Preferred stock:

The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred to as preferred stock.

Identify the par per share of the preferred stock.

Par per share of the preferred stock} =Value of preferred stockNumber of shares issued and outstanding=$200,00010,000=$20

Therefore, the par value of the preferred stock is $20 per share.

b)

To determine

Calculate the dividend per share on the preferred stock.

b)

Expert Solution
Check Mark

Explanation of Solution

Dividends:

Dividends are the rewards to the stockholders for investing their money in the company. Payment of dividend depends upon the decision of the management.

Calculate the dividend per share on the preferred stock.

Dividend per share on the preferred stock} = Par per share of the preferred stock × Dividend percent=$20×6%=$1.20 per share

Therefore, the dividend per share on the preferred stock is $1.20 per share.

c)

To determine

Compute the number of common stock shares outstanding.

c)

Expert Solution
Check Mark

Explanation of Solution

Compute the number of common stock shares outstanding:

ParticularsShares
Common stock issued100,000 shares
Less: Treasury stock(1,000 shares)
Common stock outstanding99,000 shares

Table (1)

Therefore, common stock shares outstanding are 99,000 shares.

d)

To determine

Identify the average issue price per share of the common stock.

d)

Expert Solution
Check Mark

Explanation of Solution

Common stock:

These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation. The dividend payments are not guaranteed and are paid after the payment made to the preferred stockholders.

Identify the average issue price per share of the common stock.

Average issue price per share of the common stock} =Value of common stock (1)Number of shares issued=$1,500,000100,000=$15 per share

Therefore, the average issue price per share of the common stock is $15 per share.

Working Note:

(1) Calculate the value of common stock.

Value of common stock =(Value of the shares issued and outstanding)+(Paid-in-capital in excess of stated value-common stock)=$1,000,000+$500,000=$1,500,000

e)

To determine

Explain the difference between the average issue price and the market price of the common stock.

e)

Expert Solution
Check Mark

Explanation of Solution

The average price per share of a common stock is $15 and the market price of the common stock per share is $42. The  reasons for such difference are that the investors of the company are anticipating above average performance in the coming future and improvement of economic conditions in the market which will lead to rise in the market price of the common stock.

f)

To determine

Identify the  number of shares  that will be outstanding  after the stock split, calculate the amount that will be transferred  from the retained earnings account because of the stock split and also identify the market price of the common stock immediately after the stock split.

f)

Expert Solution
Check Mark

Explanation of Solution

Identify the number of shares that will be outstanding after the stock split:

Shares outstanding  after stock split= (Number of shares outstanding )×Stock split(2-for-1)=99,000 shares × 2=198,000 shares

Therefore, 198,000 shares will be outstanding after the stock split.

Calculate the amount that will be transferred from the retained earnings account because of the stock split:

No amount will be transferred from the retained earnings account because of the stock split.

Identify the market price of the common stock immediately after the stock split:

Market price of the common stock after stock split} = Market price of common stockStock split(2-for-1)=$422=$21

Therefore, the market price of the common stock immediately after the stock split is $21.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Requirement 1. Compute AustinAustin ​Company's earnings per share for 20182018. Assume the company paid the minimum preferred dividend during 20182018. Round to the nearest cent.   Select the​ formula, then enter the amounts to calculate the​ company's earnings per share for 20182018. ​(Abbreviations used: Ave.​ = average, OS​ = outstanding, SE​ = stockholders'​ equity, shrs​ = shares.)   (   -   ) /     = Earnings per share (   -   ) /   =     Choose from any list or enter any number in the input fields and then click Check Answer.   2 parts remaining     Clear All Check Answer           Data Table   2018 2017 Income Statement—partial:     Net Income $6,660 $20,000   Dec. 31, 2018 Dec. 31, 2017 Balance Sheet—partial:     Total Assets $200,000 $265,000 Paid-In Capital:     Preferred Stock—9%, $6 Par Value;…
need help with blanks of this problem
Question 1- Texas Instruments (TXN) (please include your Excel spreadsheet file!) Actual data for Texas Instruments common stock! Suppose on December 31, 2011 you purchased TXN stock at $29.11 per share. You hold TXN until December 31, 2021 when you sold it at $188.47 per share. During this holding period, you received the following annual dividends per share. Year Annual DPS Year Annual DPS 2012 $0.72 2017 $2.12 2013 $1.07 2018 $2.63 2014 $1.24 2019 $3.21 2015 $1.40 2020 $3.72 2016 $1.64 2021 $4.21 Using the above TXN stock data and using Excel spreadsheet, determine the average annual return for your TXN investment. Question 2 TXN stock price on December 31, 2020 was $162.70 per share. Calculate the 2021 annual "holding period return" (HPR). Show all work. Question 3 Using the table above, determine the average annual growth rate for TXN dividends per share for the period 2012-2021. Show formula, input, & calculation. Excel is optional.

Chapter 8 Solutions

Survey Of Accounting

Ch. 8 - 11. What is the difference between contributed...Ch. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - 14. What is the meaning of each of the following...Ch. 8 - 15. What is the difference between cumulative...Ch. 8 - 16. What is no-par stock? How is it recorded in...Ch. 8 - 17. Assume that Best Co. has issued and...Ch. 8 - 18. If Best Co. issued 10,000 shares of 20 par...Ch. 8 - 19. What is the difference between par value stock...Ch. 8 - 20. Why might a company repurchase its own stock?Ch. 8 - 21. What effect does the purchase of treasury...Ch. 8 - 22. Assume that Day Company repurchased 1,000 of...Ch. 8 - 23. What is the importance of the declaration...Ch. 8 - 24. What is the difference between a stock...Ch. 8 - 25. Why would a company choose to distribute a...Ch. 8 - 26. What is the primary reason that a company...Ch. 8 - 27. If Best Co. had 10,000 shares of 20 par value...Ch. 8 - 28. When a company appropriates retained earnings,...Ch. 8 - Prob. 29QCh. 8 - Prob. 30QCh. 8 - Prob. 31QCh. 8 - 32. What are some reasons that a corporation might...Ch. 8 - Prob. 1ECh. 8 - Exercise 8-2 Effect of accounting events on the...Ch. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Exercise 8-5 Characteristics of capital stock The...Ch. 8 - Exercise 8-6 Effect of issuing common stock on the...Ch. 8 - Exercise 8-7 Recording and reporting common and...Ch. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Exercise 8-13 Recording and reporting treasury...Ch. 8 - Prob. 14ECh. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Prob. 19PCh. 8 - Problem 8-20 Effect of business structure on...Ch. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Problem 8-23 Recording and reporting stock...Ch. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Problem 8-26 Treasury stock transactions and...Ch. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 1ATCCh. 8 - ATC 8-3 Research Assignment Analyzing Skecherss...Ch. 8 - Prob. 4ATCCh. 8 - ATC 11-7 Ethical Dilemma Bad news versus very bad...
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Text book image
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Text book image
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:9781285595047
Author:Weil
Publisher:Cengage
Text book image
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Text book image
Fundamentals of Financial Management, Concise Edi...
Finance
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Fundamentals of Financial Management, Concise Edi...
Finance
ISBN:9781305635937
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning