AP11-17B (Stock splits and stock dividends) Pegahmagabow Company has 250,000 common shares outstanding. The market price of $200 per share has made the shares unaffordable to certain investors. Because it wants to make the shares more widely available to all investors, the company is deciding whether to split its shares four-for-one or declare a 30% stock dividend. Required a. Which of the two options being considered would have the least impact on retained earnings and why? b. Prepare the journal entry if the company decides to split its shares four-for-one. c. Prepare the journal entries if the company decides to declare and issue a 30% stock dividend. d. Which option would you recommend Pegahmagabow undertake to achieve their objective of making their shares more affordable? AP11-18B (P/E, dividend payout, dividend yield and ROE) OCloud Corporation's suite of software products and services provides secure and scalable solutions for global companies. The following is an extract from the company's 2020 and 2019 comparative income statements and statement of financial position. The market price of Cloud's common shares was $40.93 and $38.20 on June 30, 2020, and June 30, 2019, respectively. OCloud declared dividends per common share of $0.477 and 0.415 for 2020 and 2019, respectively. OCLOUD CORPORATION Years Ended June 30, 2020, and 2019 (in thousands) Comparative Income Statement 2020 Total revenues $2.291.057 Total cost of revenues 762,391 Total operating expenses 1,175,734 Net income $1,025,659 Statement of Financial Position 2020 Total assets $7,480,562 Total liabilities 3,947,243 Common share capital 1,439,850 Total shareholders' equity $3.533,319 Weighted average number of common shares outstanding 253,879 2019 $1.824.228 574.000 881,665 $ 284,477 2019 $5,154,144 3.774,947 817.788 $1,978,656 242,926 Required a. Calculate the return on shareholders' equity for OCloud in 2020. Note that OCloud's articles of incorporation authorize only common shares. The average return for the shares listed on the Toronto Stock Exchange in a comparable period was 19.8%. What information does your calculation provide an investor? b. Calculate earnings per share and the price/earnings ratio for the years 2020 and 2019. What does your calculation indicate about OCloud's earnings? c. Calculate the dividend payout ratio and the dividend yield for 2020 and 2019. What do the results of these ratios tell us about OCloud? AP11-14B (Share issuance, dividends, financial statement preparation) The Di Vidnd Corporation was incorporated on January 2, 2020, with two classes of share capital: an unlimited number of common shares S7 cumulative, non-voting, redeemable preferred shares with an authorized limit of 75,000 During 2020, the following transactions occurred: 1. The company issued 10,000 preferred shares at S25 per share and 10,000 common shares for cash proceeds of $55,000 2. It issued 60,000 common shares in exchange for equipment with an estimated fair market value of $300,000 3. In October, the company's board of directors declared cash dividends in the amount of $3.50 per share on the preferred shares. No dividends were declared on common shares. The dividend was payable in December 4. In December the cash dividends declared in October were paid. 5. The company had sales revenue of $2,075,000 and incurred operating expenses of S1,825,000 during the year. During 2021, the following transactions occurred: 6. In October, the company's board of directors declared total cash dividends in the amount of $200,000. The dividends were payable on December 14. 7. In December, the cash dividends from October were paid. 8. At the end of December, the board of directors declared and distributed a 20% stock dividend on the common shares. The estimated market value of the common shares at the time was $7 per share. 9. The company had sales revenue of $2,100,000 and incurred $1,005,000 in operating expenses during the second year. Required a. Prepare journal entries to record the above transactions, including closing entries for net income and dividends declared in transactions 3, 6, 7 and 8. b. Use a spreadsheet or table format like the one in Chapter End Review Problem 11-4 to track the changes in all of the shareholders' equity accounts over the two-year period. c. How large a dividend could the board of directors legally declare at the end of the second year? d. Prepare the shareholders' equity section of the statement of financial position at the end of the second year