Question
Instructions Dan's Dependable Delivery is a national delivery service. You are an accountant for Dan's Dependable Delivery, and you are responsible for managing equity records.
Instructions
Dan's Dependable Delivery is a national delivery service. You are an accountant for Dan's Dependable Delivery, and you are responsible for managing equity records. For this project you will:
Prepare the journal entries for equity.
Prepare the Statement of Stockholders' Equity for Dan's Dependable Delivery.
Calculate the return on equity.
Part 1: Prepare the journal entries for equity.
Use the journal workbook page of the Excel template.
Date | Transaction |
January 2 | Issued an additional 10,000 shares of $1 par common stock for $10 per share. |
January 6 | Declared a cash dividend on 5,000 shares of 5% $4 par preferred stock and a $.20 per share dividend on 40,000 shares of common stock outstanding. |
January 15 | The date of record for January 5 cash dividend declaration. |
January 20 | Paid the cash dividend declared on January 5. |
March 15 | Declared a 2-for-1 stock split by calling in the 40,000 shares of $1 par common stock and issuing new stock in its place. |
April 10 | Declared and distributed a 10% stock dividend on the common stock when the market value was $12 per share. |
June 14 | Purchased 1,000 shares of common stock for the treasury for $13 per share. |
December 22 | Sold 500 treasury shares for $15 per share. |
Part 2: Prepare a Statement of Shareholders' Equity for Dan's Dependable Delivery
Dan's Dependable Delivery began the year with 30,000 $1 Common shares issued and outstanding. Paid in Capital in Excess of Par was $25,000 and Retained Earnings were $175,000. Net Income for the current year is $35,000. The company had 5000 outstanding shares of $4 par, 5% Preferred Stock. Taking the transactions from part one into consideration, complete the Statement of Shareholders' Equity for the current year end. Use the table in part two of the template.
Part 3: Calculate and interpret the asset turnover ratio for Dan's Dependable Delivery
Given the following information calculate Dan's Dependable Delivery's return on equity. Show your work in part three of the template.
Dan's Dependable Delivery | Current year | Last year | Previous Year |
Sales | $500,000 | $470,000 | $489,000 |
Equity | $2,249,950 | $2,120,750 | $2,056,250 |
One of Dan's Dependable Delivery competitors is a small regional company called Best Delivery Services. It shows these numbers on its financial statements.
Best Delivery Services | Current year | Last year | Previous Year |
Sales | $230,000 | $215,000 | $150,000 |
Equity | $1,500,000 | $1,500,750 | $1,056,250 |
In the text box below your calculations, convince someone which company is a better investment and justify your choice. Use only 140 characters. Only the first 140 characters will be used as your answer.
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