Analyzing and Interpreting Equity Accounts and Comprehensive Income Assume this
ID: 2714461 • Letter: A
Question
Analyzing and Interpreting Equity Accounts and Comprehensive Income
Assume this is the shareholders' equity section of the 2008 balance sheet for Procter & Gamble Company and its statement of shareholders' equity.
(a) What does the term convertible (in reference to the company's Class A preferred stock) mean?
Convertible means the holder of the security has an option to sell the security at any time.
Convertible means the holder of the security has an obligation to convert (exchange) the security into another security.
Convertible means the holder of the security has an option to surrender the security and to receive cash at any time.
(d) What is the accumulated other comprehensive income account? Explain.
The accumulated other comprehensive income account reflects the cumulative amount by which the company's common stock has increased or decreased since issuance.
The accumulated other comprehensive income account reflects the cumulative profit on transactions with shareholders.
The accumulated other comprehensive income account reflects the cumulative profit recognized by the company less the cumulative dividends that have been paid to shareholders.
June 20 (In millions, except per share amounts) 2008 2007 Shareholders' Equity Convertible Class A preferred stock, stated value $ 1 per share(600 shares authorized) $ 1,366 $ 1,406 Non-voting Class B preferred stock, stated value $ 1 per share
(200 shares authorized) -- -- Common stock, stated value $ 1 per share (10,000 shares authorized;
shares issued: 2008-4,001.8, 2007-3,989.7) 4,002 3,990 Additional paid-in capital 60,527 59,250 Reserve for ESOP debt retirement (1,325) (1,308) Accumulated other comprehensive income 3,746 617 Treasure stock, at cost (shares held: 2008-969.1, 2007-857.8) (47,588) (38,772) Retained earnings 49,475 41,797 Total shareholders' equity $ 70,203 $ 66,980
Explanation / Answer
(a) What does the term convertible (in reference to the company's Class A preferred stock) mean?
Convertible means the holder of the security has an option to convert (exchange) the security into another security.
(b) How many shares of common stock did Procter & Gamble issue when convertible Class A preferred stock was converted during fiscal 2008?
Answer
No of shares of common stock issue ,preferred stock was converted = 4802 thousand shares
(c) For "employee plan issuances," at what average price was the common stock issued as of year-end 2008? (Round your answer to two decimal places.)
$Answer
Average price was the common stock issued as of year-end 2008 = 2480/44910 * 1000
Average price was the common stock issued as of year-end 2008 = $ 55.22
(d) What is the accumulated other comprehensive income account?
The accumulated other comprehensive income account reflects the cumulative change in net assets (defined as assets less liabilities) for transactions other than net income transactions and transactions with shareholders
(e) What cash dividends did Procter & Gamble pay in 2008 for each class of stock?
common dividends = $ 3999 Million
preferred dividends =$ 167 Million
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