Exercise 10-17 Complete the accounting cycle using stockholders' equity transactions (LO10-2, 10-4, 10-5, 10-8)

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On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances:

Accounts	Debit			Credit
Cash	$	42,700
Accounts Receivable		44,500
Supplies		7,500
Equipment		64,000
Accumulated Depreciation				$	9,000
Accounts Payable					14,600
Common Stock, $1 par value					10,000
Additional Paid-in Capital					80,000
Retained Earnings					45,100
Totals	$	158,700		$	158,700

During January 2021, the following transactions occur:

January		2		Issue an additional 2,000 shares of $1 par value common stock for $40,000.
January		9		Provide services to customers on account, $14,300.
January		10		Purchase additional supplies on account, $4,900.
January		12		Purchase 1,000 shares of treasury stock for $18 per share.
January		15		Pay cash on accounts payable, $16,500.
January		21		Provide services to customers for cash, $49,100.
January		22		Receive cash on accounts receivable, $16,600.
January		29		Declare a cash dividend of $0.30 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 10,000 shares outstanding on January 1, 2021, and dividends are not paid on treasury stock.)
January		30		Resell 600 shares of treasury stock for $20 per share.
January		31		Pay cash for salaries during January, $42,000.

Exercise 10-17 Part 7

7. Analyze the following for Grand Finale Fireworks:

a-1. Calculate the return on equity for the month of January.

a-2. If the average return on equity for the industry for January is 2.5%, is the company more or less profitable than other companies in the same industry?

multiple choice 1

More profitable

Less profitable

b. How many shares of common stock are outstanding as of January 31, 2021?

c-1. Calculate earnings per share for the month of January. (Hint: To calculate average shares of common stock outstanding take the beginning shares outstanding plus the ending shares outstanding and divide the total by 2.)

c-2. If earnings per share was $3.60 last year (i.e., an average of $0.30 per month), is earnings per share for January 2021 better or worse than last years average?

multiple choice 2

Better

Worse

- Please provide step by step.

Thank you