Question
the following is the capital strueture and partial liablies of Waterton Wafles Watermelon and Worcestershire Co. at December 31, 2022: Current Liabilities: * Notes Payable..
the following is the capital strueture and partial liablies of Waterton Wafles Watermelon and Worcestershire Co. at December 31, 2022:
Current Liabilities:
* Notes Payable.. .... $ 2,000,000
Other various current liabilities .... $5,000,000
Total Current Liabilities.... $ 7,000,000
Long-term Liabilities:
5% Convertible debentures due April 15, 2026.... $ 10,000,000
Total long-term debt... $ 10,000,000
Shareholders' Equity:
$4 Cumulative convertible preferred shares, non-par; 1,600,000 shares authorized; 580,000 issued and outstanding..... $ 12,000,000
Common Shares, non-par, 10,000,000 shares authorized, 3,490,000 shares issued and outstanding
...4.200,000
Contributed Surplus
.... 2,100,000
Retained Earnings.
..38,250.000
Total paid in Capital & Retained Earnings.
... $56,100,000
Total Shareholders' Equity.
... $50,650,000
ADDITIONAL INFORMATION:
a.The 5% convertible debentures were issued at their face value of $10,000,000 in 2020. The debentures are due in 2026 and until then are convertible into common stock of Waterton W's at the rate of 50 shares for each $500 debenture.
b.The $4 cumulative, convertible preferred shares were issued in 2021. On July 1, 2022, and on October 1, 2022, holders of the preferred shares converted 50,000 and 20,000 preferred shares, respectively, into common shares. Each preferred share is convertible into 2 shares of common stock.
c.On March 1, 2022, Waterton W's issued 400,000 shares of common stock for land and buildings.
d. On April 1, 2022, 300,000 common shares were cancelled.
d. Dividends on the prefered shares have been paid quartety (MachR3. uno 30, Soptember 30, &
December 31) through December 31, 2022.
e.Stock options were granted/written to the president of the corporation on January 1, 2022. Each of the 20,000 options permits the holder to purchase one share of common stock for $10 per share. The options are exercisable at any time after December 31, 2025 (within 10 years). The average market price of the shares during 2022 was $12.50. Waterton W's uses the "Treasury Share method" for accounting for stock options.
f. Net income of Waterton Waffles Watermelon and Worcestershire Co. for the year ended December 31, 2022, was $4,000,000. The income tax rate is 40%, and 10% rate of return after tax is normal for Waterton W's.
the following is the capital strueture and partial liablies of Waterton Wafles Watermelon and Worcestershire Co. at December 31, 2022:
Current Liabilities:
* Notes Payable.. .... $ 2,000,000
Other various current liabilities .... $5,000,000
Total Current Liabilities.... $ 7,000,000
Long-term Liabilities:
5% Convertible debentures due April 15, 2026.... $ 10,000,000
Total long-term debt... $ 10,000,000
Shareholders' Equity:
$4 Cumulative convertible preferred shares, non-par; 1,600,000 shares authorized; 580,000 issued and outstanding..... $ 12,000,000
Common Shares, non-par, 10,000,000 shares authorized, 3,490,000 shares issued and outstanding
...4.200,000
Contributed Surplus
.... 2,100,000
Retained Earnings.
..38,250.000
Total paid in Capital & Retained Earnings.
... $56,100,000
Total Shareholders' Equity.
... $50,650,000
ADDITIONAL INFORMATION:
a.The 5% convertible debentures were issued at their face value of $10,000,000 in 2020. The debentures are due in 2026 and until then are convertible into common stock of Waterton W's at the rate of 50 shares for each $500 debenture.
b.The $4 cumulative, convertible preferred shares were issued in 2021. On July 1, 2022, and on October 1, 2022, holders of the preferred shares converted 50,000 and 20,000 preferred shares, respectively, into common shares. Each preferred share is convertible into 2 shares of common stock.
c.On March 1, 2022, Waterton W's issued 400,000 shares of common stock for land and buildings.
d. On April 1, 2022, 300,000 common shares were cancelled.
d. Dividends on the prefered shares have been paid quartety (MachR3. uno 30, Soptember 30, &
December 31) through December 31, 2022.
e.Stock options were granted/written to the president of the corporation on January 1, 2022. Each of the 20,000 options permits the holder to purchase one share of common stock for $10 per share. The options are exercisable at any time after December 31, 2025 (within 10 years). The average market price of the shares during 2022 was $12.50. Waterton W's uses the "Treasury Share method" for accounting for stock options.
f. Net income of Waterton Waffles Watermelon and Worcestershire Co. for the year ended December 31, 2022, was $4,000,000. The income tax rate is 40%, and 10% rate of return after tax is normal for Waterton W's.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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