P14 4 the howe companys stockholders equity account

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P14-4 The Howe Company’s stockholders’ equity account follows: Common Stock (400,000 shares at $4 par) $1,600,000 Paid in capital in excess of par $1,000,000 Retained Earnings $1,900,000 Total Stockholder’s Equity $4,500,000
The earnings available for common stockholders from this period’s operations are 100,000, which have been included as part of the 1.9 million retained earnings. A. What is the maximum dividend per share that the firm can pay?
B. If the firm has 160,000 in cash, what is the largest per-share dividend it can pay without borrowing?
C. Indicate the accounts and changes, if any, that will result if the firm pays the dividends indicated in parts a & b.
D. Indicate the effects of an $80,000 cash dividend on stock holder’s equity.
P4-11 Sarah Warren currently holds 400 shares of Nutri-Foods. The firm has 40,000 shares outstanding. The firm most recently had earnings available for common stockholders of 80,000 and it’s stock has been selling for $22 per share. The firm intends to retain its earnings and pay a 10% stock dividend. A. How much does the firm currently earn per share?
B. What proportion of the firm does Sarah currently own?
C. What proportion of the firm will Sarah own after the stock dividend? Explain your answer.

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