quiz 10 - Fa09

quiz 10 - Fa09 - market value of the common shares was $27...

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Name: 4-Digit Section 14516 Various Topics Related to Common and Preferred Shares: 1. Issuance of Shares: Graham Company issued 80,000 common shares for $1,200,000 on January 1, Year 1. At the same time the firm issued 10,000 shares of its 7% preferred stock in exchange for land worth $800,000. These preferred shares are participating, cumulative and each share is convertible into 4 shares of common stock. In Year 1, Graham had Net Income of $700,000. Early in Year 2, the firm decided to issue a 25% common stock dividend when the shares had a fair market value of $22 per share. The board of directors properly determined legal value of these shares to be $14 per share. No cash dividends were paid in Year 2. During Year 2, the firm had Net Income of $680,000. Required : Determine these values as indicated: $1,100,000 Retained Earnings at December 31, Year 2 $1,480,000 Common Stock account balance at December 31, Year 2 Early in Year 3, the firm distributed an 8% common stock dividend when the fair
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Unformatted text preview: market value of the common shares was $27 each. Net Income in Year 3 was $900,000. The firm declared and distributed a cash dividend in December 31, Year 3, in the amount of $300,000. Required: Determine these values as indicated: $1,484,000 Retained Earnings at December 31, Year 3 $1,696,000 Common Stock account balance at December 31, Year 3 $127,744 Cash distributed in Year 3 to common shareholders $172,256 Cash distributed in Year 3 to preferred shareholders Early in Year 4, the firm declared and distributed a ‘4 for 1’ stock split when the fair market value of each common share was $41. Cash dividends declared and distributed late in Year 4 amounted to $320,000. Net Income for Year 4 was $1,100,000. Required: Determine these values as indicated: $217,438 Cash distributed in Year 4 to common shareholders $102,562 Cash distributed in Year 4 to preferred shareholders...
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This note was uploaded on 02/23/2010 for the course BUAD 250A at USC.

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