ch 11 second part acct 2010 clemson

Gobble Corp. has 300,000 shares authorized, 200,000 shares issued, and 20,000 treasury shares. Gobble Corp. declares a $1 per share dividend. What is the total dividend declared?

$180,000 (200,000 share issued - 20,000 in treasury = 180,000 shares outstanding * $1/share)

Assume F Co. has 10,000 shares of $50 par, 7% preferred stock. What is the annual amount of the preferred stock dividend?

$35,000 -10,000 shares * $50 par = $500,000 Total Par Value -$500,000 * 7% dividend rate = $35,000 total dividend

what are dividends in arrears

any unpaid dividends from previous years

what is the formula for determining the amount of preferred dividends

dividend = dividend rate * total par value of preferred stock

what is a stock dividend

dividends that are not paid in cash but in additional shares of stock

example of EPS: National Beverage's income for 2016 was $61.2 million, preferred dividends of $0.20 million, and the average number of shares outstanding during the year was 46.6 million....calculate the EPS

($61.2 million - $0.20 million)/46.6 million = $1.31/share

national beverage's stock price was $61.86 when the company reported its 2016 EPS of $1.31

($61.86/$1.31) = 47.2

National Beverage's income for 2016 was $61.2 million, preferred dividends were $0.2 million, and the average Common Stockholders' Equity was $176.8 million

(61.2 million - $0.2 million)/$176.8 million = 34.5%

what is the formula for ROE

(Net Income - Preferred Dividends)/Average common stockholder's equity) all multiplied by 100 to give you a percentage

whats the formula for P/E ratio

(current stock price -per share-)/(earnings/share -annual-)

what is the formula for EPS

(net income - preferred dividends)/(average number of common shares outstanding)

example of dividends on preferred stock, may be paid at a fixed rate: if dividends are declared on National Beverage's "2.5%, $1 par value" preferred stock the dividend will = ______

2.5 cents/share ($0.025 = 2.5% * $1)

what are the 4 dividend dates

1. declaration date 2. date of record 3. date of payment 4. year end

comparing stock dividend vs stock split (incr, decr, or unchanged) stock dividend: 1. # shares: _____ 2. Par value per share: ______ 3. Total par value: ______ 4. Transfer from retained earnings to contributed capital: Yes or no 5. Total equity: _________ 6. Journal entry: Yes or no stock split: 1. # shares: ____ 2. Par value per share: ____ 3. Total par value: ______ 4. Transfer from retained earnings to contributed capital: Yes or No 5. Total equity: ________ 6. Journal entry: Yes or no

1. increase 2. unchanged 3. increases 4. yes 5. unchanged 6. yes stock split 1.increase 2. decreases 3. unchanged 4. no 5. unchanged 6. no

what are two other facts about dividends

1. not legally required 2. creates liability at declaration

how does preferred stock differ from common stock( 3)

1. preferred stock allows dif voting rights (gives super-voting rights to some and no voting rights to some) 2. dividends on preferred stock, if any, may be paid at a fixed rate 3. preferred stock carries priority over common stock (means any declared dividends must be paid to preferred stockholders before they can be paid to common stockholders)

what are 3 reasons corporations issue stock dividends

1. remind stockholders of the accumulating wealth in the company 2. reduce the market price/share of stock 3. signal that the company expects strong financial performance in the future

what are the 2 things company's board of directors consider when deciding whether or not to declare a cash dividend

1. sufficient retained earnings- state laws usually limit dividends to no more than the balance in retained earnings 2. sufficient cash - gotta have enough cash to pay the dividend

on april 1, 2018, Yogi Corp. BOD declared a cash dividend of $0.50/share on 600,000 outstanding common stock shares. The dividend will be paid on May 31, 2018, to common stock shareholders of record on May 26, 2018...what are the journal entries on 4/1, 5,26, and 5/31

4/1 dividend declared 300,000 dividend payable 300,000 5/26 nothing 5/31 dividend payable 300,000 cash 300,000

In addition to its common stock, National Beverage has $1 par value NONCUMULATIVE preferred stock with a 7 percent dividend rate. Assume 100,000 of these shares are outstanding. Dividends were not paid last year. The board of directors just declared total dividends of $400,000....How much will each class of stock receive? (preferred and common)

Total dividend declared = $400,000 Preferred Stock (non cum): -current years ($1 par value * 100,000 shares * 7%) = 7,000 remainder = $393,000 common stock = $393,000

In addition to its common stock, National Beverage has $1 par value CUMULATIVE preferred stock with a 7% dividend rate. Assume 100,000 of these shares are outstanding, one year of dividends are in arrears, and the board of directors just declared total dividends of $400,000....How much will each class of stock receive? (preferred and common stock)

Total dividend declared = $400,000 preferred stock (cumulative): -in arrears (1$ * 100,000 shares * 7%) = $7,000 -current yr. (1$ * 100,000 shares * 7%) = $7,000 Remainder = $386,000 Common Stock = $386,000

What is the Price/Earnings (P/E) ratio and what does a higher number mean

a measure of the value that investors place on a company's common stock -means investors anticipate an improvement in the company's future results

what is a statement of stockholder's equity

a more comprehensive version of the statement of retained earnings and has a column for each stockholders' equity account and shows the factors that increased and decreased these account balances

what is year end

all temporary accounts, including dividends are closed

describe retained earnings in simple terms

amount of equity the company itself has generated for stockholders but not yet distributed to them)

how are stock dividends accounted for? and difference between large and small stock dividend

by transferring an amount from retained earnings to contributed capital accounts -a large stock dividend (more than 25% of the company's outstanding stock) is recorded at par value meaning the decrease in RE = the increase in the Common Stock account -a small stock dividend (less than 25% of the company's outstanding stock) is recorded at market value meaning the decrease in RE (at market value)> the increase in the Common Stock account (at par value)

National Beverage issued 400,000 shares of its $1 par value preferred stock for $19,704,000...what does the journal entry look like

cash 19,704,000 (D) preferred stock 400,000 (C) Additional paid-in capital 19,304,000 (C)

what is the difference between current (noncumulative) dividend preference and cumulative dividend preference

current: the current preferred dividends must be paid before paying common stock dividends cumulative: any unpaid dividends from previous years must be paid before common dividends are paid

what is the date of payment and how is it accounted for

date which cash is disbursed to pay the dividend liability owed to each stockholder -decrease in cash and dividends payable

if the preferred stock is noncumulative, any dividends not declared in previous years are _______

lost forever

Are dividends an expense

no

are stock splits dividends

no

is a journal entry required for stock split

no

is a journal entry required for the record date

no

when computing EPS, are dividends on preferred stock included in net income?

no

determine a 2-for-1 stock split when the beginning SE looks like this: number of shares---------1,000,000 par value/share-----------$0.01 total par value------------$10,000 retained earnings---------$650,000 total SE--------------------$660,000

number of shares---------2,000,000 par value/share-----------$0.005 total par value------------$10,000 retained earnings---------$650,000 total SE--------------------$660,000

preferred stock redemption ex: National Beverage redeemed 120,000 shares of its 1$ par value preferred stock for $6,000,000 in 2016....what does the journal entry look like

preferred stock 120,000 (D) APIC 5,880,000 (D) cash 6,000,000 (C)

what is earnings per share (EPS) and what does a higher ratio mean

reports how much profit is earned for each share of common stock outstanding -greater profitability

xyz corporation issued a 100% stock dividend on its 100,000 outstanding shares of $1 par value common stock. Market value of the shares issued was 20$/share...what is the journal entry

retained earnings 100,000 common stock 100,000 ((100,000 * 100%) * 1)

what is Return on Equity (ROE) and what does a higher ratio mean

the amount of income earned for each dollar of common stockholder's equity -means stockholders are likely to enjoy greater returns

what is the date of record

the cutoff date for determining the specific stockholders to be paid the dividend

what is the declaration date and how is it accounted for

the date the company's board of directors approves the dividend dividends is debited, dividends payable is credited

what is a stock split

the total number of authorized shares is increased by a specified amount, like 2 for 1. -number of shares increases -par value/share decreases -retained earnings is not affected