At the end of the year, the records of NCIS Corporation provided the following s

Question

At the end of the year, the records of NCIS Corporation provided the following selected and incomplete data: Common stock (par $10); no changes in account during the year. Shares authorized, 400,000. Shares issued: _______ (all shares were issued at $15 per share. Total cash collected: $2,130,000. Treasury stock: 7,000 shares (repurchased at $14 per share). The treasury stock was acquired after a stock split was announced. Net income, $282,150. Dividends declared and paid: $163,350. Retained earnings beginning balance: $755,000.

At the end of the year, the records of NCIS Corporation provided the following selected and incomplete data: Common stock (par $10); no changes in account during the year. Shares authorized, 400,000. Shares issued: Treasury stock: 7,000 shares (repurchased at $14 per share). The treasury stock was acquired after a stock split was announced. Net income, $282,150. Dividends declared and paid: $163,350. Retained earnings beginning balance: $755,000. (all shares were issued at $15 per share. Total cash collected: $2,130,000. Required: 1. Complete the following tabulation: Shares authorized Shares issued Shares outstanding 2. What is the balance in the Additional Paid-in Capital account. Additional paid-in capital 3. What is earnings per share (EPS). (Round your answer to 2 decimal places.) Earnings per share

Explanation / Answer

1) Shares Authorized = 400,000 shares (given in the question)

Shares issued = Cash Collected/Issue Price

= $2,130,000/$15 per share = 142,000

Shares outstanding = Shares issued - Treasury Stock

= 142,000 shares - 7,000 shares = 135,000 shares

2) Balance in Additional paid in Capital = (Issue Price - Par Value)*Shares issued

= ($15 - $10)*142,000 shares = $710,000

3) Earning Per Share = Net Income/Shares Outstanding

= $282,150/135,000 shares = $2.09 per share

4) Dividends paid per share = Dividends paid/Shares Outstanding

= $163,350/135,000 shares = $1.21 per share

5) Treasury stock should be reported on the balance sheet under the section of Stockholder's Equity in the amount of $98,000 (7,000 shares*$14 per share).

Treasury Stock $98,000

6) If the board of directors voted a 2 for 1 stock split (i.e. 100% stock split) then the number of shares will doubled. After the stock split, the par value per share will be $5 ($10/2) and the number of outstanding shares will be 270,000 (135,000 shares*2).

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