Learning Materials
Features
Discover
Chapter 15: Question 14Q (page 810)
For what reasons might a corporation purchase its own stock?
A corporation may repurchase its company鈥檚 shares to increase EPS and other financial ratios to help increase the company鈥檚 assets.
Over 30 million students worldwide already upgrade their learning with 91影视!
All the tools & learning materials you need for study success - in one app.
Get started for free
Faith Evans Corporation is a regional company which is an SEC registrant. The corporation鈥檚 securities are thinly traded on NASDAQ. Faith Evans Corp. has issued 10,000 units. Each unit consists of a \(500 par, 12% subordinated debenture and 10 shares of \)5 par common stock. The units were sold to outside investors for cash at \(880 per unit. Prior to this sale, the 2-week ask price of common stock was \)40 per share. Twelve percent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value.
Instructions
(Preferred Stock Dividends) Cajun Company has outstanding 2,500 shares of \(100 par, 6% preferred stock and 15,000 shares of \)10 par value common. The following schedule shows the amount of dividends paid out over the last 4 years.
Instructions
Allocate the dividends to each type of stock under assumptions (a) and (b). Express your answers in per share amounts using the format shown below
Assumptions | |||||
(a) Preferred, noncumulative And nonparticipating | (b) Preferred, cumulative, and fully participating | ||||
Year | Paid-out | Preferred | Common | Preferred | Common |
2012 | \(13,000 | ||||
2013 | \)26,000 | ||||
2014 | \(57,000 | ||||
2015 | \)76,000 |
(Stock Dividends and Stock Split) Oregon Inc. \(10 par common stock is selling for \)110 per share. Four million shares are currently issued and outstanding. The board of directors wishes to stimulate interest in Oregon common stock before a forthcoming stock issue but does not wish to distribute capital at this time. The board also believes that too many adjustments to the stockholders鈥� equity section, especially retained earnings, might discourage potential investors. The board has considered three options for stimulating interest in the stock:
The board has considered three options for stimulating interest in the stock:
Instructions
Acting as financial advisor to the board, you have been asked to report briefly on each option and, considering the board鈥檚 wishes, make a recommendation. Discuss the effects of each of the foregoing options.
Teller Corporation鈥檚 post-closing trial balance at December 31, 2017, was as follows.
TELLER CORPORATION POST-CLOSING TRIAL BALANCE DECEMBER 31, 2017 | ||
Dr. | Cr. | |
Accounts payable | \( 310,000 | |
Accounts receivable | \) 480,000 | |
Accumulated depreciation鈥攂uilding and equipment | 185,000 | |
Allowance for doubtful accounts | 30,000 | |
Bonds payable | 700,000 | |
Building and equipment | 1,450,000 | |
Cash | 190,000 | |
Dividends payable on preference shares鈥攃ash | 4,000 | |
Inventories | 560,000 | |
Land | 400,000 | |
Prepaid expenses | 40,000 | |
Retained earnings | 201,000 | |
Share capital鈥攐rdinary (\(1 par value) | 200,000 | |
Share capital鈥攑reference (\)50 par value) | 500,000 | |
Share premium鈥攐rdinary | 1,000,000 | |
Share premium鈥攖reasury | 160,000 | |
Treasury shares鈥攐rdinary at cost | 170,000 |
|
Totals | \(3,290,000 | \)3,290,000 |
On December 31, 2017, Teller had the following number of ordinary and preference shares.
Ordinary | Preference | |
Authorized | 600,000 | 60,000 |
Issued | 200,000 | 10,000 |
Outstanding | 190,000 | 10,000 |
The dividends on preference shares are \(4 cumulative. In addition, the preference shares have a preference in the liquidation of \)50 per share.
Instructions
Prepare the equity section of Teller鈥檚 statement of financial position at December 31, 2017.
What features or rights may alter the character of preferred stock?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Flashcards 
91影视 AI 
Notes 
Study Plans 
Study Sets 
Find a degree 
Magazine