Ch 8

Survey of Accounting 8e

Q.1

Stockholders' Equity Section of Balance Sheet

Premium Imports Inc. retails racing products for BMWs, Porsches, and Ferraris.

The following accounts and their balances appear in the ledger of Premium Imports Inc. on

November 30, the end of the current year:

Common Stock, $10 par $840,000

Paid-In Capital in Excess of Par-Common Stock 252,000

Paid-In Capital in Excess of Par-Preferred Stock 100,800

Paid-In Capital from Sale of Treasury Stock-Common 63,300

Preferred 4% Stock, $50 par 1,680,000

Retained Earnings 3,582,000

Treasury Stock-Common 62,700

One hundred thousand shares of preferred and 400,000 shares of common stock are authorized. There are 5,700

shares of common stock held as treasury stock.

Prepare the Stockholders' Equity section of the balance sheet as of November 30, the end of the current year.

Premium Imports Inc.

Stockholders' Equity Section of the Balance Sheet

November 30

Paid-in capital:

_______________ $ __________

_______________ $ __________ $ __________

_______________ $ __________

_______________ $ __________ $ __________

_______________ $ __________

Total paid-in capital $ __________

_______________ $ __________

Total $ __________

_______________ $ __________

Total stockholders' equity $ __________

Q 2.

Dividends on Preferred and Common Stock

Yukon Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Canada, Montana,

Idaho, Oregon, and Washington. Yukon Bike Corp.

declared the following annual dividends over a six-year period

ending December 31 of each year:

Year 1, $24,000;

Year 2, $30,000;

Year 3, $48,000;

Year 4, $132,000;

Year 5, $174,000; and

Year 6, $210,000.

During the entire period, the outstanding stock of the company was composed of

20,000 shares of 3% preferred stock, $100 par, and

100,000 shares of common stock, $10 par.

Instructions:

1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six

years. If required, round your answers to the nearest cent. If the amount is zero, please enter "0".

Preferred Dividends Common Dividends

Year Total Dividends Total Per Share Total Per Share

Year 1 $ 24,000 $ $ $ $

Year 2 30,000

Year 3 48,000

Year 4 132,000

Year 5 174,000

Year 6 210,000

--------------------Price Per Share Totals-$________---------------------$________

2. Calculate the average annual dividend per share for each class of stock for the six-year period. If required,

round your answers to the nearest cent.

Average annual dividend for preferred: $_______ per share

Average annual dividend for common: $ _______per share

3. Assuming a market price per share of $165 for the preferred stock and $15 for the common stock, calculate

the average annual percentage return on initial shareholders' investment, based on the average annual dividend

per share for preferred stock and for common stock.

Round your answers to two decimal places.

Preferred stock: ________%

Common stock:_________ %