Please do 5-10.. Answers 1-5 posted too just in case if needed.
EQUITY PROBLEM Bruins Inc. has the following items in their current balance sheet: Common Stock 10,000,000 shares authorized, $1,000,000 issued Capital Surplus Treasury Stock on Common 100,000 shares Cumulative Preferred Stock 500,000 authorized $3,000,000 $9,000,000 $6,000,000 [296] $100 par $8,000,000 56,000,000 Treasury Stock on Preferred Stock 10000 shares Retained Earnings 1. Bruins Inc. wishes to announce a total cash dividend of S40,000,000. How is this dividend to be split between the common and preferred stockholders? 2. What is the dividend per share for common and preferred after the dividend distribution from question 1 above? 3. Suppose Bruins Inc. was two years in the arrears in paying dividends to the preferred stockholders, then what is the dollar amount of the preferred and common shareholder dividend? 4. How many Bruins common stock shares are outstanding? 5. If Bruins Inc. announces a 4 for 1 stock split of the cumulative preferred then what is the new total amount of the preferred stock? 6. If Bruins Inc. were to provide for a 10% common stock dividend, then how many new shares are to be mailed to existing shareholders? 7. Assume in question 61 the market price of the common stock was S15 at the time of the stock dividend announcement. What is the journal entry to record the stock dividend? 8. Using the equity portion of the Bruins Inc. balance sheet above, determine the amount of the total equity in Bruins Inc. Assume this question ignores the results of questions [1-71 above. 9. What is the impact of the common and preferred cash dividend 1$40,000,000 as per question 1 abovel on the current balance sheet of Bruins Inc.? 10, what is the impact of the 20% common stock dividend on the balance sheet? Assume this question ignores questions [1-91 above. Requirement- Cumulative preferred shares issued Less: Par value of Treasury stock-PreferredS1 Cumulative preferred shares outstanding Preferred shares, dividend % Dividends paid to preferred shares Total dividends paid Dividends paid to common shares 58,000,000 $1.000,000 [10,000 x $100) $7,000,000 $140,000 [$7000000 x 2%) $40,000,000 $39.860,000 1540000000-S140000) NOTE: Dividends on preferred stocks shall be payable to # of preferred stocks outsanding only. Requirement-2 Common Preferred Number of shares issued Less: Treasury stock Number of shares outstanding Dividends paid Dividend per share (DPS) 80,000 [Preferred $8,000,000/5100 80,000 10,000 [Given 0,000(a) 100,000 $39.8e $140,000-.)(b) [As calculated in Part-11 $44.29$2.00)b) Requirement-3 Cumulative preference shares means if firm fails to pay or pays short preferred dividends in any of the years, it must be accumulated to next year. When next years dividends are declared, arrear of preferred dividend shall be paid first; current year's preferred dividends shall be paid next; if anything out of total dividends is left, common dividend shall be paid. Therefore, One year's preferred dividend Number of years of dividends are in arrear Arrear dividend payable to preferred shares Add: Current year's preferred dividend Total dividends to preferred shares Total dividends paid Dividends paid to common shares $140,000 [As calculated in Part-11 $280,000 IS140000 x 2 years] $420,000 [S280000 $140000) $7000000 x 261 000,000 $39,580,000 ($40000000-S4200001 Requirement 4 Common Number of common shares issued 1,000,000 Less: Treasury stock-Common Rof common shares outstanding- 900 00,000 4-for-1 stock split refers to splitting every existing outstanding number of share into 4 shares. it would increase outstanding of shares by 3 times more than the exting number of shares outstanding so as to reach the ending figure of 4 shares for every one share held as outstanding before stock split. Therefore, u of existing outstanding pref. shares before stock split Number of shares offered for every one share (4-for-1) Numbre of outstanding pref. shares after stock split 70,000 As calculated in Part-2 [70,000 x 4] 280,000 It should be noted that stock split increases outstanding number of shares only resulting par value per share to decline 4 times from $100 per share to $25 per share but total value of preferred shares outstanding will not be affected by this stock split. Therefore, Amount of preferred shares issued after stock split will be Less: Amount of preferred shares treasury after stock split will be Amount of preferred shares outstanding after stock split will be $1,000,000 [Ref: Part-1 $7,000,000 I-280000 shares $251
