Hey I could really use some help here.
Problem:
On Dec. 31, 2010, the stockholders’ equity section of Koval company’s balance sheet appeared as follows:
Contributed capital:
Common stock, $8 par value, 400,000 shares authorized, 120,000 shares issued and outstanding = $960,000
Additional paid-in capital = $2,560,000
Total contributed capital = $3,520,000
Retained Earnings = $1,648,000
Total stockholders’ equity = $5,168,000
The following are selected transactions involving stockholders’ equity in 2011:
Jan. 4 The board of directors obtained authorization for 40,000 shares of $40 par value noncumulative preferred stock that carried an indicated dividend rate of $4 per share and was callable at $42 per share.
Jan 14 The company sold 24,000 shares of the preferred stock at $40 per share and issued another 4,000 in exchange for a building valued at $160,000.
March 8 The board of directors declared a 2-for-1 stock split on the common stock.
April 20 After the stock split, the company purchased 6,000 shares of common stock for the treasury at an average price of $12 per share.
May 4 The company sold 2,000 of the shares purchased on April 20, at an average price of $16 per share.
July 15 The board of directors declared a cash dividend of $4 per share on the preferred stock and $0.40 per share on the common stock.
July 25 Date of record.
Aug. 15 Paid the cash dividend.
Nov. 28 The board of directors declared a 15 percent stock dividend when the common stock was selling for $20 per share to be distributed on Jan. 5 to stockholders of record on Dec. 15
Dec. 15 Date of record for the stock dividend.
Required
1. Record the above transactions in journal form.
2. Prepare the stockholders’ equity section of the company’s balance sheet as of Dec. 31, 2011. Net loss for 2011 was $436,000.
3. Compute the book value per share for preferred and common stock (including common stock distributable on Dec. 31, 2010 ad 2011, using end-of-year shares outstanding. What effect would you expect the change in book value to have on the market price per share pf the company?
Problem:
On Dec. 31, 2010, the stockholders’ equity section of Koval company’s balance sheet appeared as follows:
Contributed capital:
Common stock, $8 par value, 400,000 shares authorized, 120,000 shares issued and outstanding = $960,000
Additional paid-in capital = $2,560,000
Total contributed capital = $3,520,000
Retained Earnings = $1,648,000
Total stockholders’ equity = $5,168,000
The following are selected transactions involving stockholders’ equity in 2011:
Jan. 4 The board of directors obtained authorization for 40,000 shares of $40 par value noncumulative preferred stock that carried an indicated dividend rate of $4 per share and was callable at $42 per share.
Jan 14 The company sold 24,000 shares of the preferred stock at $40 per share and issued another 4,000 in exchange for a building valued at $160,000.
March 8 The board of directors declared a 2-for-1 stock split on the common stock.
April 20 After the stock split, the company purchased 6,000 shares of common stock for the treasury at an average price of $12 per share.
May 4 The company sold 2,000 of the shares purchased on April 20, at an average price of $16 per share.
July 15 The board of directors declared a cash dividend of $4 per share on the preferred stock and $0.40 per share on the common stock.
July 25 Date of record.
Aug. 15 Paid the cash dividend.
Nov. 28 The board of directors declared a 15 percent stock dividend when the common stock was selling for $20 per share to be distributed on Jan. 5 to stockholders of record on Dec. 15
Dec. 15 Date of record for the stock dividend.
Required
1. Record the above transactions in journal form.
2. Prepare the stockholders’ equity section of the company’s balance sheet as of Dec. 31, 2011. Net loss for 2011 was $436,000.
3. Compute the book value per share for preferred and common stock (including common stock distributable on Dec. 31, 2010 ad 2011, using end-of-year shares outstanding. What effect would you expect the change in book value to have on the market price per share pf the company?