Required:
Please analyze the case and use the information pertaining to PepsiCos common stock, preferred stock, stock repurchases, cash dividends, stock splits, and GAAP earnings per share (EPS) versus non-GAAP EPS to answer the following questions. Please refer to the appropriate case Exhibits.
A. Common stock
(1) How many shares of common stock were authorized as of December 31, 2018? How many shares were issued as of December 31, 2018? How many shares were outstanding as of December 31, 2018?
(2) Did the company pay dividends on its common stock during the year ended December 31. 2018? How do you know? If yes, what was the effect of those dividends on the balance sheet, the income statement, and the statement of cash flows? What entry (ies) did PepsiCo make related to dividends in 2018?
(3) Suppose that instead of paying cash dividends in 2018, assume that PepsiCo has issued 44.6 million shares in the form of a stock dividend, equating to $4,930 million. How would your responses to (A.2) change?
B. Share repurchases (treasury stock)
(4) Did PepsiCo repurchase common shares during the year ended December 31, 2018? How do you know? What was the effect of this purchase on the balance sheet, the income statement, and the statement of cash flows?
(5) In accordance with PepsiCos balance sheet, its repurchase of common shares is debited to repurchased common stock. Based on our discussion in class, what is the account for share repurchases, commonly used by most companies? What should the journal entry look like?
This project accounts for 7% of your course grade.
Please work in group of 2~4 people and limit your responses to 3 pages.
Your answers have to be typed and printed. All text should be 12-point font, double spaced.
Your report is expected to be grammatically correct and uses proper citing and referencing.
1
C. Preferred stock
(6) Why does the company have preferred stock outstanding?
(7) Based on information provided in PepsiCos Consolidated Statement of Equity (Exhibit 5), its preferred stock account was affected by three separate events during 2018, including the redemption, conversion, and retirement. Please complete the following journal entries made by PepsiCo to record these events. (Hint: The account of Repurchased Preferred Stock is essentially the account of Treasury stock we cover in class.)
(i) (ii)
(iii)
D EPS
Repurchased Preferred Stock Cash
Preferred Stock
Common Stock at par
(c)
Preferred Stock (f)
Repurchased Preferred Stock
(a)
(a)
(b)
0 million
(d)
(h)
(8) In case Exhibit 9, Panel A, the company provides a reconciliation of the $5.66 EPS figure to the income statements reported EPS figure of $8.78. Also referred to as Core EPS in a PepsiCo-related press release, this figure, $5.66, is a non-GAAP financial measure many companies choose to report. What does a non-GAAP financial measure mean? What does the terminology core suggest to you? What is the reason that many companies provide non-GAAP financial information in their financial reports?
C. Preferred stock (6) Why does the company have preferred stock outstanding? (7) Based on information provided in PepsiCo's Consolidated Statement of Equity (Exhibit 5). its preferred stock account was affected by three separate events during 2018, including the redemption, conversion, and retirement. Please complete the following journal entries made by PepsiCo to record these events. (Hint: The account of "Repurchased Preferred Stock" is essentially the account of Treasury stock" we cover in class.) (i) Repurchased Preferred Stock Cash (a) Preferred Stock Common Stock at par (c) 0 million (iii) Preferred Stock Repurchased Preferred Stock DEPS (8) In case Exhibit 9. Panel A, the company provides a reconciliation of the $5.66 EPS figure to the income statement's reported EPS figure of $8.78. Also referred to as "Core EPS" in a PepsiCo-related press release, this figure, $5.66, is a non-GAAP financial measure many companies choose to report. What does a non-GAAP financial measure mean? What does the terminology "core" suggest to you? What is the reason that many companies provide non-GAAP financial information in their financial reports? ACCT 302: Financial Reporting Case: Shareholders' Equity at PepsiCo Due Date: Tuesday, December 10, 2019 (submit a hard copy in class) Case Guidelines: This project accounts for 7% of your course grade. Please work in group of 2-4 people and limit your responses to 3 pages. Your answers have to be typed and printed. All text should be 12-point font, double spaced. Your report is expected to be grammatically correct and uses proper citing and referencing. Required: Please analyze the case and use the information pertaining to PepsiCo's common stock, preferred stock, stock repurchases, cash dividends, stock splits, and GAAP carnings per share (EPS) versus non-GAAP EPS to answer the following questions. Please refer to the appropriate case Exhibits. A. Common stock (1) How many shares of common stock were authorized as of December 31, 2018? How many shares were issued as of December 31, 2018? How many shares were outstanding as of December 31, 2018? (2) Did the company pay dividends on its common stock during the year ended December 31. 2018? How do you know? If yes, what was the effect of those dividends on the balance sheet, the income statement, and the statement of cash flows? What entry (ies) did PepsiCo make related to dividends in 2018? (3) Suppose that instead of paying cash dividends in 2018, assume that PepsiCo has issued 44.6 million shares in the form of a stock dividend, equating to $4.930 million. How would your responses to (A.2) change? B. Share repurchases (treasury stock) (4) Did PepsiCo repurchase common shares during the year ended December 31, 2018? How do you know? What was the effect of this purchase on the balance sheet, the income statement, and the statement of cash flows? (5) In accordance with PepsiCo's balance sheet, its repurchase of common shares is debited to "repurchased common stock". Based on our discussion in class, what is the account for share repurchases, commonly used by most companies? What should the journal entry look like? C. Preferred stock (6) Why does the company have preferred stock outstanding? (7) Based on information provided in PepsiCo's Consolidated Statement of Equity (Exhibit 5). its preferred stock account was affected by three separate events during 2018, including the redemption, conversion, and retirement. Please complete the following journal entries made by PepsiCo to record these events. (Hint: The account of "Repurchased Preferred Stock" is essentially the account of Treasury stock" we cover in class.) (i) Repurchased Preferred Stock Cash (a) Preferred Stock Common Stock at par (c) 0 million (iii) Preferred Stock Repurchased Preferred Stock DEPS (8) In case Exhibit 9. Panel A, the company provides a reconciliation of the $5.66 EPS figure to the income statement's reported EPS figure of $8.78. Also referred to as "Core EPS" in a PepsiCo-related press release, this figure, $5.66, is a non-GAAP financial measure many companies choose to report. What does a non-GAAP financial measure mean? What does the terminology "core" suggest to you? What is the reason that many companies provide non-GAAP financial information in their financial reports? ACCT 302: Financial Reporting Case: Shareholders' Equity at PepsiCo Due Date: Tuesday, December 10, 2019 (submit a hard copy in class) Case Guidelines: This project accounts for 7% of your course grade. Please work in group of 2-4 people and limit your responses to 3 pages. Your answers have to be typed and printed. All text should be 12-point font, double spaced. Your report is expected to be grammatically correct and uses proper citing and referencing. Required: Please analyze the case and use the information pertaining to PepsiCo's common stock, preferred stock, stock repurchases, cash dividends, stock splits, and GAAP carnings per share (EPS) versus non-GAAP EPS to answer the following questions. Please refer to the appropriate case Exhibits. A. Common stock (1) How many shares of common stock were authorized as of December 31, 2018? How many shares were issued as of December 31, 2018? How many shares were outstanding as of December 31, 2018? (2) Did the company pay dividends on its common stock during the year ended December 31. 2018? How do you know? If yes, what was the effect of those dividends on the balance sheet, the income statement, and the statement of cash flows? What entry (ies) did PepsiCo make related to dividends in 2018? (3) Suppose that instead of paying cash dividends in 2018, assume that PepsiCo has issued 44.6 million shares in the form of a stock dividend, equating to $4.930 million. How would your responses to (A.2) change? B. Share repurchases (treasury stock) (4) Did PepsiCo repurchase common shares during the year ended December 31, 2018? How do you know? What was the effect of this purchase on the balance sheet, the income statement, and the statement of cash flows? (5) In accordance with PepsiCo's balance sheet, its repurchase of common shares is debited to "repurchased common stock". Based on our discussion in class, what is the account for share repurchases, commonly used by most companies? What should the journal entry look like
