Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 20Y6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You’ve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution of the stock dividend is made. The company has two classes of stock: common stock and cumulative preferred stock. You’ve been able to retrieve the following information so far: Number of common shares authorized 800,000 Number of common shares issued 650,000 Par value of common shares $20 Par value of cumulative preferred shares $30 Paid-in capital in excess of par-common stock $7,000,000 Paid-in capital in excess of par-preferred stock $0 Total retained earnings before the stock dividend is declared $33,500,000 No treasury shares have been reissued. Total Cash Preferred Dividends Common Dividends Year Dividends Total Per Share Total Per Share 20Y1 $20,000 $20,000 $0.20 $0 $0.00 20Y2 36,000 36,000 0.36 0 0.00 20Y3 79,000 34,000 0.34 45,000 0.09 20Y4 105,000 30,000 0.30 75,000 0.15 20Y5 120,000 30,000 0.30 90,000 0.18 20Y6 180,000 30,000 0.30 150,000 0.30 The accounting manager for the company prepared the schedule of cash dividends paid from 20Y1 to 20Y6 on the Pranks, Inc. panel. However, one of the reasons for Pranks, Inc.’s missing information is that the manager is away on vacation and is unreachable by phone, because he is backpacking on a remote island that does not have cell phone reception. Management would like you to determine some information from the data you’ve collected regarding its outstanding stock. Fill in the following answers. How many shares of common stock are outstanding? How many shares of preferred stock are outstanding? What is the preferred dividend as a percent of par? In which years has Pranks, Inc. paid cumulative preferred dividends in arrears? Check all that apply. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 The company declared a 4% common stock dividend on December 1, and would like you to compute the following pieces of missing information. The market value of the common shares is $25.00 on December 1, and is $30.00 on the actual distribution date of the stock, December 31. Fill in the missing information in the following table, using the information given and your work on the other panels. All “before” items are before the stock dividend was declared. All “after” items are after the stock dividend was declared and closing entries were recorded at the end of the year. Total paid-in capital before the stock dividend Total retained earnings before the stock dividend Total stockholders’ equity before the stock dividend Total paid-in capital after the stock dividend Total retained earnings after the stock dividend Total stockholders’ equity after the stock dividend

Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 20Y6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You’ve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution of the stock dividend is made. The company has two classes of stock: common stock and cumulative preferred stock. You’ve been able to retrieve the following information so far: Number of common shares authorized 800,000 Number of common shares issued 650,000 Par value of common shares $20 Par value of cumulative preferred shares $30 Paid-in capital in excess of par-common stock $7,000,000 Paid-in capital in excess of par-preferred stock $0 Total retained earnings before the stock dividend is declared $33,500,000 No treasury shares have been reissued. Total Cash Preferred Dividends Common Dividends Year Dividends Total Per Share Total Per Share 20Y1 $20,000 $20,000 $0.20 $0 $0.00 20Y2 36,000 36,000 0.36 0 0.00 20Y3 79,000 34,000 0.34 45,000 0.09 20Y4 105,000 30,000 0.30 75,000 0.15 20Y5 120,000 30,000 0.30 90,000 0.18 20Y6 180,000 30,000 0.30 150,000 0.30 The accounting manager for the company prepared the schedule of cash dividends paid from 20Y1 to 20Y6 on the Pranks, Inc. panel. However, one of the reasons for Pranks, Inc.’s missing information is that the manager is away on vacation and is unreachable by phone, because he is backpacking on a remote island that does not have cell phone reception. Management would like you to determine some information from the data you’ve collected regarding its outstanding stock. Fill in the following answers. How many shares of common stock are outstanding? How many shares of preferred stock are outstanding? What is the preferred dividend as a percent of par? In which years has Pranks, Inc. paid cumulative preferred dividends in arrears? Check all that apply. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 The company declared a 4% common stock dividend on December 1, and would like you to compute the following pieces of missing information. The market value of the common shares is $25.00 on December 1, and is $30.00 on the actual distribution date of the stock, December 31. Fill in the missing information in the following table, using the information given and your work on the other panels. All “before” items are before the stock dividend was declared. All “after” items are after the stock dividend was declared and closing entries were recorded at the end of the year. Total paid-in capital before the stock dividend Total retained earnings before the stock dividend Total stockholders’ equity before the stock dividend Total paid-in capital after the stock dividend Total retained earnings after the stock dividend Total stockholders’ equity after the stock dividend

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter21: Corporations: Taxes, Earnings, Distributions, And The Statement Of Retained Earnings

Section: Chapter Questions

Problem 1EC

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Question

You’ve been able to retrieve the following information so far:

Number of common shares authorized	800,000
Number of common shares issued	650,000
Par value of common shares	$20
Par value of cumulative preferred shares	$30
Paid-in capital in excess of par-common stock	$7,000,000
Paid-in capital in excess of par-preferred stock	$0
Total retained earnings before the stock dividend is declared	$33,500,000
No treasury shares have been reissued.

	Total Cash	Preferred Dividends	Common Dividends
Year	Dividends	Total	Per Share	Total	Per Share
20Y1	$20,000	$20,000	$0.20	$0	$0.00
20Y2	36,000	36,000	0.36	0	0.00
20Y3	79,000	34,000	0.34	45,000	0.09
20Y4	105,000	30,000	0.30	75,000	0.15
20Y5	120,000	30,000	0.30	90,000	0.18
20Y6	180,000	30,000	0.30	150,000	0.30

The accounting manager for the company prepared the schedule of cash dividends paid from 20Y1 to 20Y6 on the Pranks, Inc. panel. However, one of the reasons for Pranks, Inc.’s missing information is that the manager is away on vacation and is unreachable by phone, because he is backpacking on a remote island that does not have cell phone reception. Management would like you to determine some information from the data you’ve collected regarding its outstanding stock.

Fill in the following answers.

How many shares of common stock are outstanding?
How many shares of preferred stock are outstanding?
What is the preferred dividend as a percent of par?

In which years has Pranks, Inc. paid cumulative preferred dividends in arrears? Check all that apply.

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

The company declared a 4% common stock dividend on December 1, and would like you to compute the following pieces of missing information. The market value of the common shares is $25.00 on December 1, and is $30.00 on the actual distribution date of the stock, December 31.

Fill in the missing information in the following table, using the information given and your work on the other panels. All “before” items are before the stock dividend was declared. All “after” items are after the stock dividend was declared and closing entries were recorded at the end of the year.


Total paid-in capital before the stock dividend
Total retained earnings before the stock dividend
Total stockholders’ equity before the stock dividend
Total paid-in capital after the stock dividend
Total retained earnings after the stock dividend
Total stockholders’ equity after the stock dividend

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