The year-end balance sheet of Smithfield Products includes the following stockho
ID: 2369526 • Letter: T
Question
The year-end balance sheet of Smithfield Products includes the following stockholders' equity section
(with certain details omitted):
How many shares of preferred stock have been issued?
What is the total amount of the annual dividends paid to preferred stockholders?(Round intermediate calculations to 2 decimal places. Omit the "$" sign in your response)
How many shares of common stock are outstanding?
What was the average issuance price per share of common stock?(Round your answers to2decimal places. Omit the "$" sign in your response)
What is the amount of legal capital?(Omit the "$" sign in your response)
What is the total amount of paid-in capital?(Omit the "$" sign in your response)
What is the book value per share of common stock? (There are no dividends in arrears.)(Round your answers to2decimal places. Omit the "$" sign in your response)
Assume that retained earnings at the beginning of the year amounted to $717,500 and that net income for the year was $3,970,000. What was the dividend declared during the year oneach shareof common stock? (Hint: Net income increases retained earnings, whereas dividends decrease retained earnings.)(Round your intermediate and final answers to2decimal places. Omit the "$" sign in your response)
The year-end balance sheet of Smithfield Products includes the following stockholders' equity section
(with certain details omitted):
Explanation / Answer
a.) $2,700,000/$100 par value per share = 27,000 shares outstanding
b.) $2,700,000 x 7.5% = $202,500 annual preferred stock dividend
c.) $900,000/$2 par value per share = 450,000 shares outstanding
d.) [Total Par Value + Additional Paid-In Capital]/Shares Outsanding:
[$900,000 + $9,000,000]/450,000 shares = $22 average issuance price per common share
e.) Legal Capital = Total Par Value of Company's Stock:
$2,700,000 par value of preferred stock + $900,000 par value of common stock = $3,600,000
f.) Paid-In Capital = Total Par Value of Company's Stock + Additional Paid-In Capital:
$2,700,000 + $900,000 + $9,000,000 = $12,600,000
g.) Book value per share = (Total Shareholders' Equity - Preferred Stock)/Total Common Shares Outstanding:
($15,195,000 - $2,700,000)/450,000 shares = $27.77 (rounded)
h.) Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
$717,500 + $3,970,000 - Dividends = $2,595,000
$4,687,500 - Dividends = $2,595,000
-Dividends = $(2,092,500)
Dividends = $2,092,500
Hope that helps. Please rate. Thanks.
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