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Chapter 13: Q24RQ (page 707)
What is the price/earnings ratio, and how is it calculated?
P/E Ratio also known as the price multiple, or the earnings multipleis computed by dividing the stock鈥檚 market price by the earnings per share.
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Journalizing stock issuance and cash dividends and preparing the stockholders鈥� equity section of the balance sheet
C-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes C-Mobile to issue 120,000 shares of 9%, \(150 par value cumulative preferred stock, and 140,000 shares of \)3 par value common stock. During the first month, C-Mobile completed the following transactions:
Oct. 2 Issued 18,000 shares of common stock for a building with a market value of \(260,000.
6 Issued 650 shares of preferred stock for \)160 per share.
9 Issued 14,000 shares of common stock for cash of \(84,000.
10 Declared a \)13,000 cash dividend for stockholders of record on Oct. 20. Use a separate Dividends Payable account for preferred and common stock.
25 Paid the cash dividend.
Requirements
1. Record the transactions in the general journal.
2. Prepare the stockholders鈥� equity section of C-Mobile鈥檚 balance sheet at October 31, 2018. Assume C-Mobile鈥檚 net income for the month was $95,000.
What is a stock dividend?
What does the statement of stockholders鈥� equity report? How does the statement of stockholders鈥� equity differ from the statement of retained earnings?
Identifying advantages and disadvantages of a corporation
Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage.
a. Ownership and management are separated.
Question: Accounting for cash dividends
Java Company earned net income of \(85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, \)120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.
Requirements
2. Journalize for Java the entry paying the cash dividends on January 4, 2019.
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