Question
Nicole has been financing Nicole's Getaway Spa (NGS) using equity financing. Currently NGS has authorized 100,000 no-par preferred shares and 200,000 $2 par common shares.
Nicole has been financing Nicole's Getaway Spa (NGS) using equity financing. Currently NGS has authorized 100,000 no-par preferred shares and 200,000 $2 par common shares. Outstanding shares include 50,000 preferred shares and 40,000 common shares. Recently the following transactions have taken place. a. NGS issues 1,000 preferred shares for $12 a share. b. NGS repurchases 1,000 common shares for $11 a share. c. On November 12, 2014, the board of directors declared a $0.10 cash dividend on each outstanding preferred share. d. The dividend is paid December 20, 2014.
1. Prepare the journal entries needed for each of the transactions.
2. If you were a common shareholder concerned about your voting rights, would you prefer Nicole to issue additional common shares or additional preferred shares?
3. Show the overall effect of each transaction on the assets, liabilities, and shareholders
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started