Question
The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances:
The following information applies to the questions displayed below.]
On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances:
Accounts | Debit | Credit | ||||
Cash | $ | 43,800 | ||||
Accounts Receivable | 46,700 | |||||
Supplies | 8,600 | |||||
Equipment | 75,000 | |||||
Accumulated Depreciation | $ | 10,100 | ||||
Accounts Payable | 15,700 | |||||
Common Stock, $1 par value | 11,000 | |||||
Additional Paid-in Capital | 91,000 | |||||
Retained Earnings | 46,300 | |||||
Totals | $ | 174,100 | $ | 174,100 | ||
During January 2021, the following transactions occur:
January | 2 | Issue an additional 2,000 shares of $1 par value common stock for $40,000. | ||
January | 9 | Provide services to customers on account, $16,700. | ||
January | 10 | Purchase additional supplies on account, $6,000. | ||
January | 12 | Purchase 1,300 shares of treasury stock for $19 per share. | ||
January | 15 | Pay cash on accounts payable, $17,600. | ||
January | 21 | Provide services to customers for cash, $50,200. | ||
January | 22 | Receive cash on accounts receivable, $17,700. | ||
January | 29 | Declare a cash dividend of $0.30 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 11,000 shares outstanding on January 1, 2021, and dividends are not paid on treasury stock.) | ||
January | 30 | Resell 800 shares of treasury stock for $21 per share. | ||
January | 31 | Pay cash for salaries during January, $43,100. |
7. Analyze the following for Grand Finale Fireworks:
a-1. Calculate the return on equity for the month of January.
a-2. If the average return on equity for the industry for January is 2.3%, is the company more or less profitable than other companies in the same industry?
multiple choice 1
- More profitable
- Less profitable
b. How many shares of common stock are outstanding as of January 31, 2021?
c-1. Calculate earnings per share for the month of January. (Hint: To calculate average shares of common stock outstanding take the beginning shares outstanding plus the ending shares outstanding and divide the total by 2.)
c-2. If earnings per share was $3.60 last year (i.e., an average of $3.60 per month), is earnings per share for January 2021 better or worse than last years average?
multiple choice 2
- Better
- Worse
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