Payout Ratio and Book Value per Share Divac Company has developed a statement of stockholders' equity for the year 2017 as follows:   Preferred Stock Paid-In Capital— Preferred Common Stock Paid-In Capital— Common Retained Earnings Balance, Jan. 1 $100,000 $50,000 $400,000 $40,000 $200,000 Stock issued     100,000 10,000   Net income         68,000 Cash dividend         -32,000 Stock dividend 10,000 5,000     -15,000 Balance, Dec. 31 $110,000 $55,000 $500,000 $50,000 $221,000 Divac’s preferred stock is $100 par, 8% stock. If the stock is liquidated or redeemed, stockholders are entitled to $120 per share. There are no dividends in arrears on the stock. The common stock has a par value of $4 per share. Assume that the common stockholders have a right to the total net income of $68,000. Required: 1.  Determine the dividend payout ratio for the common stock. Round the payout ratio to four decimal places, but enter as a percentage to two decimal places. For example, .34678 rounds to .3468 and would be entered as 34.68, indicating 34.68%. fill in the blank 1 % 2.  Determine the book value per share of Divac’s common stock. Round the book value per share to two decimals. $fill in the blank 2 per share

Financial Accounting: The Impact on Decision Makers
10th Edition
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Author:Gary A. Porter, Curtis L. Norton
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Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.16E
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Payout Ratio and Book Value per Share

Divac Company has developed a statement of stockholders' equity for the year 2017 as follows:

  Preferred Stock Paid-In
Capital—
Preferred
Common Stock Paid-In
Capital—
Common
Retained Earnings
Balance, Jan. 1 $100,000 $50,000 $400,000 $40,000 $200,000
Stock issued     100,000 10,000  
Net income         68,000
Cash dividend         -32,000
Stock dividend 10,000 5,000     -15,000
Balance, Dec. 31 $110,000 $55,000 $500,000 $50,000 $221,000

Divac’s preferred stock is $100 par, 8% stock. If the stock is liquidated or redeemed, stockholders are entitled to $120 per share. There are no dividends in arrears on the stock. The common stock has a par value of $4 per share. Assume that the common stockholders have a right to the total net income of $68,000.

Required:

1.  Determine the dividend payout ratio for the common stock. Round the payout ratio to four decimal places, but enter as a percentage to two decimal places. For example, .34678 rounds to .3468 and would be entered as 34.68, indicating 34.68%.
fill in the blank 1 %

2.  Determine the book value per share of Divac’s common stock. Round the book value per share to two decimals.
$fill in the blank 2 per share

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