Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Chapter 13, Problem 4P
Kraft Unlimited, Inc., was organized and authorized to issue 5,000 shares of $100 par value, 9 percent
REQUIRED
- 1. Prepare
journal entries to record these transactions. - 2. Prepare the stockholders’ equity section of Kraft’s balance sheet as it would appear on August 31, 2014. Net income for July was zero and August was $11,500.
- 3. Calculate dividend yield, price/earnings ratio, and return on equity. Assume earnings per common share are $1.00 and market price per common share is $20. For beginning stockholders’ equity, use the balance after the July transactions. (Round to the nearest tenth of a percent.)
- 4. Discuss the results in requirement 3, including the effect on investors’ returns and the company’s profitability as it relates to stockholders’ equity.
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