JRH Corporation presents the following partial balance sheet as of December 31,
ID: 2446967 • Letter: J
Question
JRH Corporation presents the following partial balance sheet as of December 31, 2015. Stockholders' Equity Preferred stock, $100 par (8%, non-cumulative; 100,000 shares authorized; ?? shares issued $1,900,000 Capital in excess of par, preferred stock 106,000 Common stock, $5 par, 200,000 shares authorized, ?? shares issued 950,000 Capital in excess of par, common stock 1,970,000 Total contributed capital $4,926,000 Retained earnings 1,170,000 Treasury Stock, 40,000 common shares, at cost (340,000) Total stockholders' equity $5,756,000
Required: How much capital did the company raise by issuing preferred stock?
How many shares of common stock were issued? What was the average issuing price
What is the current year's dividend stipulated for the preferred shareholders?
Assume that the company announces that they are going to pay $200,000 dividends. The company did not pay dividends last year. How much will be paid to the preferred stockholders?
How many shares of common stock are outstanding?
How much dividends can common shareholders received for each share of stock (round to the nearest cent)?
What is the average purchasing price of each share of treasury stock?
Explanation / Answer
Required: 1)
How much capital did the company raise by issuing preferred stock
The total capital the company raised is $1,900,000 + $106,000 = $2,006,000
2)How many shares of common stock were issued? What was the average issuing price
shares issued = $950,000/ $5 = 190,000 shares
The average issue price is $5
3)What is the current year's dividend stipulated for the preferred shareholders
Dividend to preferred shareholders = $1,900,000 @8% = $152,000
4)Assume that the company announces that they are going to pay $200,000 dividends. The company did not pay dividends last year. How much will be paid to the preferred stockholders
Dividends to preferred shareolders will be $152,000
No arrears will be paid since it is non cumulative
5)How many shares of common stock are outstanding
Common shares outstanding = issued - treasury stock
= 190,000 - 40,000 = 150,000 shares
6)How much dividends can common shareholders received for each share of stock (round to the nearest cent)?
Dividend to common stockholders = $1170,000 - $152,000 = $1018,000
dividend per share = 1018,000/150,000 = $6.79
7)What is the average purchasing price of each share of treasury stock?
average purchasing price = $340,000/ 40,000 = $8.5 per share
5)
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