Question
Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 2016, and
Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 2016, and is also declaring a stock dividend to its stockholders as the calendar year-end approaches. Youve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be calculated before the distribution of the stock dividend is made. The company has two classes of stock: common stock and cumulative preferred stock.
Youve been able to retrieve the following information so far:
Number of common shares authorized | 900,000 |
Number of common shares issued | 750,000 |
Par value of common shares | $20 |
Par value of cumulative preferred shares | $30 |
Paid-in capital in excess of par-common stock | $7,000,000 |
Paid-in capital in excess of par-preferred stock | $0 |
Total retained earnings before the stock dividend is declared | $33,500,000 |
Question #1 How many shares of common stock are outstanding? 500,000 | ||||||||||||||
How many shares of preferred stock are outstanding?100,000 | ||||||||||||||
What is the preferred dividend as a percent of par? ? Question #2 The company declared a 4% common stock dividend on December 1, and would like you to calculate the following pieces of missing information. The market value of the common shares is $25.00 on December 1, and is $30.00 on the actual distribution date of the stock, December 31. Fill in the missing information below, using the information given and your work on the other panels. All before items are before the stock dividend was declared. All after items are after the stock dividend was declared and closing entries were recorded at the end of the year.
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Total Cash | Preferred Dividends | Common Dividends | |||
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Year | Dividends | Total | Per Share | Total | Per Share |
2011 | 20,000 | 20,000 | 0.20 | 0 | 0.00 |
2012 | 36,000 | 36,000 | 0.36 | 0 | 0.00 |
2013 | 79,000 | 34,000 | 0.34 | 45,000 | 0.09 |
2014 | 105,000 | 30,000 | 0.30 | 75,000 | 0.15 |
2015 | 120,000 | 30,000 | 0.30 | 90,000 | 0.18 |
2016 | 180,000 | 30,000 | 0.30 | 150,000 | 0.30
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