The book value per share at the end of Year 2 is closest to A 470 B 420 C 065 D

The book value per share at the end of year 2 is

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120.The book value per share at the end of Year 2 is closest to:A)$4.70B)$4.20C)$0.65D)$6.90Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: MediumSolution:Book value per share = Common stockholders' equity ÷Number of common shares outstanding* = $840 ÷ 200 = $4.20*Number of common shares outstanding = Common stock ÷ Par value= $200 ÷ $1 = 200Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition16-71
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Chapter 16 “How Well Am I Doing?”--Financial Statement AnalysisUse the following to answer questions 121-127:Excerpts from Jameel Corporation's most recent balance sheet and income statement appear below:Year 2Year 1Total assets.............................................................$1,540$1,530Total liabilities.......................................................$470$490Stockholders’ equity:Preferred stock, $100 par value, 5%...................$ 100$ 100Common stock, $1 par value..............................200200Additional paid-in capital–common stock..........150150Retained earnings................................................620590Total stockholders’ equity......................................$1,070$1,040Sales (all on account)$1,290Cost of goods sold790Gross margin500Selling and administrative expense334Net operating income166Interest expense30Net income before taxes136Income taxes (30%)41Net income$95Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $3.87 per share.16-72Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
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Chapter 16 “How Well Am I Doing?”--Financial Statement Analysis121.The earnings per share of common stock for Year 2 is closest to:Earnings per share = (Net Income − Preferred Dividends) ÷Average number of common shares outstanding*= ($95 − $5) ÷ 200 = $0.45*Number of common shares outstanding = Common stock ÷ Par value= $200 ÷ $1 = 200122.The price-earnings ratio for Year 2 is closest to:Earnings per share = (Net Income − Preferred Dividends) ÷Average number of common shares outstanding*= ($95 − $5) ÷ 200 = $0.45*Number of common shares outstanding = Common stock ÷ Par value= $200 ÷ $1 = 200Price-earnings ratio = Market price per share ÷ Earnings per share (see above)= $3.87 ÷ $0.45 = 8.60Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition16-73
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Chapter 16 “How Well Am I Doing?”--Financial Statement Analysis
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