Question

Required Information [The following information applies to the questions displayed below) The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow. Stockholders' Equity (January 1) Common stock-56 par value, 180,00 shares authorized, 35,000 shares issued and outstanding $212.de Paid in capital in excess of par value, common stock 170, Retained earnings Total stockholders equity $700, eee 3700, 629 Stockholders' Equity (December 31) Common stock-56 par value, 100,000 shares authorized, 41,000 shares issued, 5,000 shares in treasury Paid in capital in excess of par value, common stock Retained earnings (560, restricted by treasury stock) $245,00 206. Less cost of treasury stock Total stockholders' equity 872. (60.000) 5812,00 The following transactions and events affected its equity during the year Jan. 5 declared 1.5e per share cash dividend, date of record January 10 Mer. 2 Perchased treasury stock for cash. hors Declared sese per share cash dividend, date of record April 10. July 5 Declared 1.seper share cash dividend, date of record July 10. July declared stock dividend when the stock's market value was 512 per share Aug. 14 Issued the stock dividend that was declared on July 31. ot c ard .se per share cash dividend, date of record October 10. 3. How much net income did the company earn this year?

Answer 1

Requirement 5:

Calculation of total cash and stock dividends:

Jan.5	Cash dividends [35,000 x $0.50]	$17,500
Apr.5	Cash dividends [30,000 x $0.50]	$15,000
July 5	Cash dividends [30,000 x $0.50]	$15,000
July 31	Stock dividends [30,000 x 20%] x $12	$72,000
Oct.5	Cash dividends [36,000 x $0.50]	$18,000
Total cash dividends and Stock dividends		$137,500

Calculation of net income during the year:

Retained earnings at December 31	$420,000
Add: Cash & Stock dividends	$137,500
(Less): Retained earnings at January 1	($320,000)
Net income	$237,500

Requirement 1:

	Par value
Corporation's preferred stock [$50,000/1,000 shares issued]	$50
Corporation's common stock [$200,000/4,000 shares issued]	$50

Requirement 2:

Book value per common share
Common stock+Retained earnings	/	Outstanding common shares	=	Book value per common share
$590,000	/	4,000	=	$147.50