Compute for the book value per share on preference and ordinary share under each of the following assumptions: a. Preference shares have liquidation value of P60 per share, no dividends in arrears b. Preference shares are cumulative with dividends in arrears for 3 years including the current year, Upon corporate liquidation, shares are preferred as to assets up to par and any dividends in arrears must be paid first before distribution may be made to ordinary shares.
Q: If you take corporate taxes and the cost of financial distress are into consideration, the market va...
A: The cost of conducting business that a company in financial crisis faces, such as a greater cost of ...
Q: You have a portfolio with the following: Stock Number of Shares Price Expected Return W 725 ...
A: Stock Number of share Price Investment Investment Ratio I II III = I*II IV=III/96250 W 725 46 3...
Q: Describe how you will ensure adequate liquidity to cover anticipated expenses. ...
A: Liquidity is needed to meet all types of expenses be it short term expenses, long term expenses, ant...
Q: During 2021, Montoya (age 15) received $2,300 from a corporate bond. He also received $900 interest ...
A: Solution:- Taxable means the income on which the income tax is charged by the tax authorities.
Q: Wade Ellis buys a car for $16,278.13. He puts 10% down and obtains a simple interest amortized loan ...
A: Given, The loan amount is $16,278.13 Down payment is 10%Rate of interest is 11.5%.
Q: Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, bu...
A: Concept :- Equivalent annual cost. It is annual cost of owning and maintaining asset determined by d...
Q: You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two ...
A: We need to calculate present value of both options by using present value of ordinary annuity formul...
Q: Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minut...
A: To Find: Projected incremental sales
Q: Based on SME’s financial statements, what is its current ratio? [Calculate to 2 decimal points XX.XX...
A: Since you have posted a multiple question so we will be solving the first question only. However if ...
Q: Other things equal, which of the following will decrease the WACC of a firm that has both debt and e...
A: The Weighted Average Cost of Capital and Capital Structure both are important factors in an organiza...
Q: XYZ Corp. raised P50 million from bonds and P110 million from ordinary shares. It invested P150 mill...
A: Given: Capital structure Debt = P50 million Equity = P110 million Investment in operating assets = P...
Q: Brazil used the free float exchange rate method from 1999. Discuss the motives of Brazil's move and ...
A: Free floating exchange rate is the market determined exchange rate that is based on supply and deman...
Q: The actual interest rate charged on a discounted note is called the _____ interest rate. a.effective...
A: Interest rate is the rate of return that is charged on the loan.
Q: Lush Gardens Co. bought a new truck for $50,000. It paid $5,500 of this amount as a down payment and...
A: Present Value of Ordinary Annuity refers to a concept that determines the value of cash flows at pre...
Q: A sum of P1,000 is invested now and left for eight years, at which time the principal is withdrawn. ...
A: Invested amount or principal amount is P1,000 Effective Annual interest rate is 5% Principal is with...
Q: Determine the principal remaining after 36 monthly payments have been made for a 5-year loan of P40,...
A: Loan (L) = P 40000 n = 5 years = 60 months Interest rate = 8% quarterly compounded Let r = Monthly i...
Q: Fowler, Inc., just paid a dividend of $2.40 per share on its stock. The dividends are expected to gr...
A: SOLUTION : GIVEN, Dividend = $2.40 Growth rate = 6.25% Required return = 12% Now, a. Calculating ...
Q: Bulldogs Inc. enters into an agreement with a firm that will factor the company’s accounts receivabl...
A: The first stage is to figure out how much money the company will get from the factoring transaction:...
Q: High-end airlines compete directly with other high-end airlines. When it comes to pricing, competito...
A: In a competitive environment, the companies will try to outdo each other on prices and services in o...
Q: Use MV = P(1 + RT) to find the maturity value (in $) of the loan. Principal Rate (%) Time Maturity V...
A: Given Principal $15,660. Rate is 11 1/2% number of months is 42.
Q: Suppose that money can be invested at 10% compounded annually. Accumulate ? 5,000 for 10 years ; Dis...
A: Present Value refers to the value of cash flows today which is to be received at some future time gi...
Q: The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the m...
A: Call option gives the opportunity to buy the stock at given price on given date of expiration but th...
Q: Determine the initial cash flow for the project. Determine the earnings before taxes for years 1 thr...
A: Since you have asked a multi-part question, we will answer the first three subparts for you. Investm...
Q: 1. On average it needs Php 250,000 per year and an additional Php 600,000 every year for major repai...
A: Total annual cost (AC) = 250,000+600,000 = Php. 850,000 Interest rate (r) = 8% Period (n) = 3 Years
Q: Bulldogs Inc. expected to sell in October 2021 1,000 units of Dell laptops with a purchase cost per ...
A: Budgeted units to be sold = 1000 Actual units sold = 1100 Budgeted purchase cost = Php 55000
Q: What is the current yield on the bonds? (Do not round intermediate calculations and enter your answe...
A: Current Yield: It represents the annual income of the bond consisting of interest payments. It is c...
Q: Bond A is zero-coupon bond paying $100 one year from now. Bond B is a zero-coupon bond paying $100 t...
A: Bonds Bonds are the liabilities of the company which is issued to raise the funds required to financ...
Q: What is the amount of compensating balance would be required for a nominal interest rate of 12% to e...
A: Borrowings are the loan which is taken by the individual to meet its financial requirements. The mor...
Q: capitalized cost of the commodity and the equivalent uniform annual cost.
A: Capitalized cost can be defined as the present value of cashflows which continue for an infinite per...
Q: A delivery company is evaluating an investment to purchase vehicles. This is expected to generate a ...
A: Present value can be calculated by using this equation. Present value =CF1/(1+r) +CF2/(1+r)2...........
Q: A proposed relaxation of credit standards of Bulldogs Inc. will increase the balance of accounts rec...
A: Solution:- Average collection period means the average days to recover money from debtors. We know, ...
Q: Choose from the two machines which is more economical: Machine B 14000 P2,000 2,400 Machine A First ...
A: You have asked to specifically calculate part c. Concept . Present worth cost method. In this me...
Q: Garrick is purchasing equipment for his job as a builder. The equipment costs $1000 and he wants to ...
A: The loan which is discharged by making installment payments consist of two components as interest mo...
Q: Tomorrow Co is financed entirely by equity that is priced to offer a 14% expected return on equity. ...
A: r[E] = r[A] + Debt /Equity * ( r[A] -r[D] )
Q: Consider the following information: State of Economy Probability of State of Economy Rate of...
A: Probability Rate of return 0.21 -0.12 0.48 0.14 0.31 0.33
Q: Find the Present Value of the Cash Flow 1 and, using this and the previous information, calculate th...
A: The value of money changes over time. For example, the value of $1000 today will not be the same as ...
Q: What is the future value of $1,540 invested for 5 years at 5% interest compounded monthly?
A: Future value = Present value(1 + Rate)^Time where, Present value = $1,540 Rate = 0.05 / 12 = 0.00416...
Q: If a student's time value of money rate is 24%, then the student would be indifferent between $77 to...
A: Interest rate (r) = 24% Present value (PV) = $77 Period (n) = 1 year
Q: What is the present discounted value of the call option? What would the present discounted value of...
A: A call option gives the holder a right but not an obligation to buy shares at a predetermined price ...
Q: Which of the following is correct with regards to cash discounts offering? a. It is used lengthen t...
A: Solution:- Cash discount means offering some more discounts to the customers, if they pay the amount...
Q: Assume oat forward prices over the next 3 years are $2.30, $2.40, and $2.33, respectively. Effective...
A: We can calculate the 3-year swap price by using the interest rates and forward price for the 3 years...
Q: Susie opens a simple interest checking account. After 6 months, her account grew from P5,000 to P506...
A: Solution:- Interest rate means the rate at which the amount invested grows to give high return of mo...
Q: Jacques has just been notified that the combined principal and interest on an amount he borrowed 19 ...
A: Loans carry the interest rate so value of loans increases with time and interest.
Q: Allen Inc. took out a 1-year, 8%, $100,000 loan on March 31, 2018. Interest is due upon maturity of ...
A: Solution:- When an amount is borrowed, the lender charges interest on it and at the maturity, princi...
Q: Bulldogs Inc. offered a one-year loan to a customer client. The instrument is a discounted note with...
A: Nominal discount rate = 15%
Q: You have been accepted into college. The college guarantees that your tuition will not increase for ...
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rat...
Q: what is the bond rate of return over the year?
A: Bond Rate of Return: It refers to the gain or loss of a security/investment for a certain period. I...
Q: Assume oat forward prices over the next 3 years are $2.30, $2.40, and $2.33, respectively. Effective...
A: We can calculate the swap price using the above 3 forward prices and the interest rate then we wil...
Q: .Use the exact interest method (365 days) and the ordinary interest method (360 days) to compare the...
A: Exact Interest: Exact interest computes the interest that is based on a year having 365 days. Ordi...
Step by step
Solved in 3 steps
- Contributed Capital Adams Companys records provide the following information on December 31, 2019: Additional information: 1. Common stock has a 5 par value, 50,000 shares are authorized, 15,000 shares have been issued and are outstanding. 2. Preferred stock has a 100 par value, 3,000 shares are authorized, 800 shares have been issued and are outstanding. Two hundred shares have been subscribed at 120 per share. The stock pays an 8% dividend, is cumulative, and is callable at 130 per share. 3. Bonds payable mature on January 1, 2023. They carry a 12% annual interest rate, payable semiannually. Required: Prepare the Contributed Capital section of the December 31, 2019, balance sheet for Adams. Include appropriate parenthetical notes.Cary Corporation has 50,000 shares of 10 par common stock authorized. The following transactions took place during 2019, the first year of the corporations existence: Sold 5,000 shares of common stock for 18 per share. Issued 5,000 shares of common stock in exchange for a patent valued at 100,000. At the end of Carys first year, total contributed capital amounted to: a. 40,000 b. 90,000 c. 100,000 d. 190,000Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.
- Hyde Corporations capital structure at December 31, 2018, was as follows: On July 2, 2019, Hyde issued a 10% stock dividend on its common stock and paid a cash dividend of 2.00 per share on its preferred stock. Net income for the year ended December 31, 2019, was 780,000. What should be Hydes 2019 basic earnings per share? a. 7.80 b. 7.09 c. 7.68 d. 6.73Cash Dividends on Common and Preferred Stock Lemon Inc. has the following information regarding its preferred and common stock: Preferred stock, S30 par, 12% cumulative; 300,000 shares authorized; 150,000 shares issued and outstanding Common stock, $2 par; 2,500,000 shares authorized; 1,200,000 shares issued; 1,000,000 outstanding As of December 31, 2019, Lemon was 3 years in arrears on its dividends. During 2020, Lemon declared and paid dividends. As a result, the common stockholders received dividends of $0.45 per share. Required: What was the total amount of dividends declared and paid? What journal entry was made at the date of declaration?Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par value common stock at 15 per share (400,000 shares were authorized). During the period January 1, 2014, through December 31, 2019, Kent reported net income of 750,000 and paid cash dividends of 380,000. On January 5, 2019, Kent purchased 12,000 shares of its common stock at 12 per share. On December 28, 2019, 8,000 treasury shares were sold at 8 per share. Kent used the cost method of accounting for treasury shares. What is Kents total shareholders equity as of December 31, 2019? a. 3,290,000 b. 3,306,000 c. 3,338,000 d. 3,370,000
- Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4, 000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 37 5. The bonds are classified as a held-to-maturity long -term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0 .60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issue d in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method . q. Accrued interest for three months on the Dream Inc. bonds purchased in (I). r. Pinkberry Co. recorded total earnings of 240 ,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39. 02 per share on December 31, 2016. The investment is adjusted to fair value , using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments h ad a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transaction s for the year ended December 31, 201 6, had been poste d [including the transactions recorded in part (1) and all adjusting entries), the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step in come statement for the year ended December 31, 201 6, concluding with earnings per share . In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. ( Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 20 6. c. Prepare a balance sheet in report form as of December 31, 2016.Common Dividends Thompson Payroll Service began in 2019 with 1,500,000 authorized and 820,000 issued and outstanding S8 par common shares. During 2019, Thompson entered into the following transactions: Declared a S0.20 per-share cash dividend on March 24. Paid the S0.20 per-share dividend on April 6. Repurchased 13,000 common shares for the treasury at a cost of S12 each on May 9. Sold 2,500 unissued common shares for $15 per share on June 19. Declared a $0.40 per-share cash dividend on August 1. Paid the $0.40 per-share dividend on September 14. Declared and paid a 10% stock dividend on October 25 when the market price of the common stock was $15 per share. Declared a 50.45 per-share cash dividend on November 20. Paid the $0.45 per-share dividend on December 20. Required: Prepare journal entries for each of these transactions. (Note: Round to the nearest dollar.) What is the total dollar amount of dividends (cash and stock) for the year? CONCEPTUAL CONNECTION Determine the effect on total assets and total stockholders equity of these dividend transactions.Common Dividends Fusion Payroll Service began 2019 with 1,200,000 authorized and 375,000 issued and outstand ing $5 par common shares. During 2019, Fusion entered into the following transactions: Declared a S0.30 per-share cash dividend on March 10. Paid the $0.30 per-share dividend on April 10. Repurchased 8,000 common shares at a cost of $18 each on May 2. Sold 1.500 unissued common shares for $23 per share on June 9. Declared a $0.45 per-share cash dividend on August 10. Paid the $0.45 per-share dividend on September 10. Declared and paid a 5% stock dividend on October 15 when the market price of the common stock was $25 per share. Declared a $0.50 per-share cash dividend on November 10. Paid the $0.50 per-share dividend on December 10. Required: Prepare journal entries for each of these transactions. (Note: Round to the nearest dollar.) Determine the total dollar amount of dividends (cash and stock) for the year. CONCEPTUAL CONNECTION Determine the effect on total assets and total stockholders equity of these dividend transactions.
- Calculating the Number of Shares Issued Castalia Inc. issued shares of its $0.80 par value common stock on September 4, 2019, for $8 per share. The Additional Paid-In Capital-Common Stock account was credited for 5612,000 in the journal entry to record this transaction. Required: How many shares were issued on September 4, 2019?Alert Companys shareholders equity prior to any of the following events is as follows: The company is considering the following alternative items: 1. An 8% stock dividend on the common stock when it is selling for 30 per share. 2. A 30% stock dividend on the common stock when it is selling for 32 per share. 3. A special stock dividend to common shareholders consisting of 1 share of preferred stock for every 100 shares of common stock. The preferred stock and common stock are selling for 123 and 31 per share, respectively. 4. A 2-for-1 stock split on the common stock, reducing the par value to 5 per share (assume the same date for declaration and issuance). The market price is 30 per share on the common stock. 5. A property dividend to common shareholders consisting of 100 bonds issued by West Company. These bonds are carried on the Alert Company books as an available-for sale investment at a fair value of 48,000 (which is also its cost); it has a current value of 54,000. 6. A cash dividend, consisting of a normal dividend and a liquidating dividend, on both the preferred and the common stock. The 10% preferred dividend includes a 2% liquidating dividend, and the 2.30 per share common dividend includes a 0.30 per share liquidating dividend (separate liquidating dividend contra accounts should be used). Required: For each of the preceding alternative items: 1. Record (a) the journal entry at the date of declaration and (b) the journal entry at the date of issuance. 2. Compute the balances in the shareholders equity accounts immediately after the issuance (any gains or losses are to be reflected in the retained earnings balance; ignore income taxes).Winona Company began 2019 with 10,000 shares of 10 par common stock and 2,000 shares of 9.4%, 100 par, convertible preferred stock outstanding. On April 2 and June 1, respectively, the company issued 2,000 and 6,000 additional shares of common stock. On November 16, Winona declared a 2-for-1 stock split. The preferred stock was issued in 2018. Each share of preferred stock is currently convertible into 4 shares of common stock. To date, no preferred stock has been converted. Current dividends have been paid on both preferred and common stock. Net income after taxes for 2019 totaled 109,800. The company is subject to a 30% income tax rate. The common stock sold at an average market price of 24 per share during 2019. Required: 1. Prepare supporting calculations for Winona and compute its: a. basic earnings per share b. diluted earnings per share 2. Show how Winona would report the earnings per share on its 2019 income statement. Include an accompanying note to the financial statements. 3. Next Level Assume Winona uses IFRS. Discuss what Winona would do differently for computing earnings per share, and then repeat Requirement 1 under IFRS.
