Identifying and Analyzing Financial Statement Effects of Cash Dividends On March 15, 2018, Bank of America issued 94,000 shares of 5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series FF for $2.35 billion. Dividends are payable semiannually on or about March 15 and September 15. a. Assume the stock was issued at face value. What is the face value of each Series FF share? $ 25,000 b. What will be the total dividend for the year ended December 31, 2018, assuming that the number of shares remains unchanged? Enter answer in millions. Round answer to the nearest million. $ 110 × million
Q: Listen An example of the no-arbitrage principle holding would be when all risk-free investments…
A: In a scenario where the no-arbitrage principle holds, risk-free investments should offer investors…
Q: What monthly compounded nominal rate would put you in the same financial position as 7.0% compounded…
A: Let the monthly compounded nominal rate of interest = iIt is given that the effective rate of the…
Q: Your firm has taken out a $537,000 loan with 8.2% APR (compounded monthly) for some commercial…
A: Loan Amortization refers to the systemetic repayment of loan and interest amount over a period of…
Q: Assume that one year ago, you bought 240 shares of a mutual fund for $27 per share and that you…
A: The objective of this question is to calculate the total return on an investment in a mutual fund.…
Q: Suppose the YTM is 0,066 for a 20-year $1000 bond with a 7% coupon rate and annual coupon payments.…
A: Bond price = whereFV = Face value or par value = $1000C = Periodic coupon = annual coupon = $1000 x…
Q: A mutual fund manager has a $20 million portfolio with a beta of 1.6. The risk-free rate is 5.5%,…
A: The CAPM model refers to the relationship between the systematic risk faced by the investment and…
Q: Company X is considering an investment project that requires an initial outlay of $500,000 and is…
A: NPV or Net Present value = Present vaue of future cash flows - Initial outlayPresent value = Future…
Q: Boeing just signed a contract to sell a Boeing 737 aircraft to Air France. Air France will be billed…
A: In the field of finance, hedging is a tactic employed to reduce or eliminate the possible adverse…
Q: The city of Kelowna, British Columbia, is considering various proposals regarding the improvement of…
A: The Benefit-Cost Ratio (B/C Ratio) is a financial metric used to evaluate the profitability or…
Q: Suppose an individual invests $24,000 in a load mutual fund for two years. The load fee entails an…
A: The annual return on the mutual funds over the two years investment period is 10.234 %Explanation:…
Q: A mutual fund manager has a $20 million portfolio with a beta of 1.7. The risk-free rate is 4.5%,…
A: The CAPM model refers to the relationship between the systematic risk faced by the investment and…
Q: General Electric has just issued a callable (at par) 10- year, 5.7% coupon bond with annual coupon…
A: The Yield to maturity ( YTM ) refers to the return that the bond provides if the bond is held till…
Q: (Bond valuation) You own a bond that pays $120 in annual interest, with a $1,000 par value. It…
A: A bond is a fixed-income security that offers the investor a constant flow of periodic coupon…
Q: The appropriate discount rate for the following cash flows is 7 percent compounded quarterly. Year…
A: $2,139.12Explanation:This question requires a quarterly discount rate because cash flows are given…
Q: Do you think the extra expense of providing acapital budget is imortant?
A: The objective of the question is to understand the importance of the extra expense of providing a…
Q: Below is information regarding the capital structure of Micro Advantage Incorporated. On the basis…
A: Given,Coupon rate= 5%Issue Price (98% of par value)= $5,700,000*98%=$ 5,586,000Current Market Price…
Q: Cooperton Mining just announced it will cut its dividend from $4.09 to $2.54 per share and use the…
A: Cooperton Mining Share Price AnalysisGiven Information:Dividend cut: From $4.09 to $2.54 per…
Q: Future value of an annuity Using the values below, answer the questions that follow. (Click on the…
A: Time value of money (TVM) refers to the concept which proves that the value of money today is higher…
Q: Cost of preferred stock. Kyle is raising funds for his company by selling preferred stock. The…
A: Par value = $77Dividend rate = 8.4%Selling price = $56.48Cost of preferred stock can be computed by…
Q: Birchcreek Construction has three payments left on a debt obligation in the amounts of $5,500,…
A: To calculate the present value of the remaining debt payments and determine what amount Birchcreek…
Q: HR Industries (HRI) has a beta of 1.2; LR Industries's (LRI) beta is 0.4. The risk-free rate is 6%,…
A: The objective of the question is to calculate the difference in the required returns for HR…
Q: Calculate the NPV of the investment. Note: Do not round intermediate calculations. Round your answer…
A: The net present value aids in determining the viability of the venture. It looks at the projected…
Q: 3- After years of training, Sara has landed a contract playing professional lacrosse. Eager to…
A: The agency problem arises when a principal (shareholder in a company) hires an agent…
Q: A call option is currently selling for $2.9. It has a strike price of $50 and six months to…
A: The put-call parity theorem is a principle that establishes a relationship between the prices of…
Q: The committee decided to secure a loan of $2,400,000 for the overall project. They got two offers…
A: Simple Interest: Throughout the loan duration, simple interest is computed on the initial principal…
Q: Suppose a firm has 16.5 million shares of common stock outstanding and six candidates are up for…
A: In cumulative voting, shareholders are allowed to cast all their votes for a single candidate or…
Q: 3. (20') Suppose that an investor with a 4-year investment horizon is considering purchasing a…
A: In the given case, the total return will be computed by finding the total return after reinvesting…
Q: Calculate the change in the firm's EPS from this change in capital structure. Note: Round your…
A: EPS is a measure of a company's profitability, calculated by dividing the net income by the number…
Q: a. Is this bond currently trading at a discount, at par, or at a premium? Explain. (Select the best…
A: The bond functions similarly to a certificate of debt. The value of that certificate, should you…
Q: Financial Math, question One: Ryan purchased an annuity that had an interest rate of 2.75%…
A: Present value refers to the current value of future investment or series of investments at a rate of…
Q: Madetaylor Inc. manufactures financial calculators. The company is deciding whether to introduce a…
A: Sunk cost: Costs which have already been incurred or committed to be incurred and which have no…
Q: Consider the following Information for stocks A, B, and C. The returns on the three stocks are…
A: Stocks correlation = less than perfect positive correlationRisk free rate = 6.5%Stocks weight in…
Q: Amarillo Bank Corp has a defined benefit plan with 60 employees. What is the minimum number of…
A: The employee benefit plan is the benefits plan given by the employer to the employee in which…
Q: Big Old Serious Supermarket (BOSS) is a retail company that manages a chain of supermarkets,…
A: Ratio analysisThe process of measuring the performance of the company in various aspects is called…
Q: b. As an equity portfolio manager, you may use certain risk-adjusted performance measures. Describe…
A: The objective of the question is to understand the three risk-adjusted performance measures -…
Q: a. Compute earnings per share for both firms. Assume a 20 percent tax rate. Note: Round your answers…
A: Although there are guidelines of solving 1 question, i am solving 2 questions/parts here1.EPS means…
Q: You have been hired as a consultant for Pristine Urban-Tech Zither, Incorporated (PUTZ),…
A: Net present value:Net Present Value (NPV) stands as a crucial financial metric, serving to assess…
Q: Giambona Corporation's stock had a required return of 8.50% last year when the risk - free rate was…
A: The expected return is the minimum required rate of return which an investor required from the…
Q: Mike wants to donate $5,000,000 to establish a fund to provide an annual scholarship in perpetuity.…
A: Donation amount=$5,000,000Interest rate=4.93%Annual scholarship after 3.5 years.
Q: K The yield to maturity of a $1,000 bond with a 7.5% coupon rate, semiannual coupons, and two years…
A: Current price of bond is the price which can be paid for purchase of the bond. It is also called…
Q: As an analyst at an investment bank, you are asked to compare the monthly returns of the two stocks…
A: The objective of the question is to compare the monthly returns of Tesla and Apple Inc. stocks from…
Q: You have an opportunity to invest $ 108 000 now in return for $ 79500 in one year and $ 30 comma 300…
A: The objective of this question is to calculate the Net Present Value (NPV) of an investment…
Q: Bruin, Incorporated, has identified the following two mutually exclusive projects: Year 67234 Cash…
A: As per the guidelines, the solution for the first three sub parts will be provided. If you want the…
Q: e calculate the prices for bonds A-D and the yields for bonds D-G. Ꭰ E F G Coupon Par Value 6.00%…
A: Value of a bond is the present value of the future cash flows discounted at a required rate of…
Q: Which statement is wrong about the PSA model for prepayment?The prepayment speed of a specific…
A: For estimating the rate of prepayments for mortgage-backed securities (MBS), the Public Securities…
Q: Compute the monthly payments for a vehicle that costs $14 comma 10014,100 if you financed the…
A: Loan amortization is the process of paying off a debt over time through regular payments. With each…
Q: You are trying to decide how much to save for retirement. Assume you plan to save $5,000 per year…
A: Time value of money is a financial concept which is used to analyze various investments and…
Q: Walker Wear (WW) manufactures special zombie bite-proof clothing and accessories and experienced…
A: According to distribution approach, the after making provision for capital budget remaining amount…
Q: Use the following information for Ingersoll, Incorporated. Assume the tax rate is 24 percent. 2020…
A: Balance Sheet (in thousands)Item 2020 2021Current Assets Cash 6,247 6,826Accounts receivable 8,160…
Q: You are considering opening a copy service in the student union. You estimate your fixed cost at…
A: a) The break-even point in dollars for the copy service can be calculated by dividing the fixed…
Step by step
Solved in 3 steps with 2 images
- Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 20 par common stock at 30, receiving cash. b. Issued 4,000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 375. The bonds are classified as a heldtomaturity long-term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0.60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 45, including commission. p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method. q. Accrued interest for three months on the Dream Inc. bonds purchased in (l). r. Pinkberry Co. recorded total earnings of 240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39.02 per share on December 31, 2016. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero. Instructions 1. Journalize the selected transactions. 2. After all of the transactions for the year ended December 31, 2016, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step income statement for the year ended December 31, 2016, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. (Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 2016. c. Prepare a balance sheet in report form as of December 31, 2016.Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows: a. Issued 15,000 shares of 0 par common stock at 0, receiving cash. b. Issued 4,000 shares of 80 par preferred 5% stock at 100, receiving cash. c. Issued 500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. d. Declared a quarterly dividend of 0.50 per share on common stock and 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. e. Paid the cash dividends declared in (d). f. Purchased 7,500 shares of Solstice Corp. at 40 per share, plus a 150 brokerage commission. The investment is classified as an available-for-sale investment. g. Purchased 8,000 shares of treasury common stock at 33 per share. h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for 24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. i. Declared a 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. j. Paid the cash dividends to the preferred stockholders. k. Received 27,500 dividend from Pinkberry Co. investment in (h). l. Purchased 90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of 375. The bonds are classified as a held- to-maturitv long-term investment. m. Sold, at 38 per share, 2,600 shares of treasury common stock purchased in (g). n. Received a dividend of 0.60 per share from the Solstice Corp. investment in (f). o. Sold 1,000 shares of Solstice Corp. at 545, including commission. p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method, q. Accrued interest for three months on the Dream Inc. bonds purchased in (1). r. Pinkberry Co. recorded total earnings of 240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income. s. The fair value for Solstice Corp. stock was 39.02 per share on December 31, 2016. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero. Instructions Journalize the selected transactions. After all of the transactions for the year ended December 31, 2016, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follows were taken from the records of Equinox Products Inc. a. Prepare a multiple-step income statement for the year ended December 31, 2016, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 100,000 and preferred dividends were 100,000. (Round earnings per share to the nearest cent.) b. Prepare a retained earnings statement for the year ended December 31, 2016. c. Prepare a balance sheet in report form as of December 31, 2016. Income statement data: Advertising expense 150,000 Cost of merchandise sold 3,700,000 Delivery expense 30,000 Depreciation expense -office buildings and equipment 30,000 Depreciation expensestore buildings and equipment 100,000 Dividend revenue 4,500 Gain on sale of investment 4,980 Income from Pinkberry Co. investment 76,800 Income tax expense 140,500 Interest expense 21,000 Interest revenue 2,720 Miscellaneous administrative expense 7.500 Miscellaneous selling expense 14,000 Office rent expense 50,000 Office salaries expense 170,000 Office supplies expense 10,000 Sales 5,254,000 Sales commissions 185,000 Sales salaries expense 385,000 Store supplies expense 21,000 Retained earnings and balance sheet data: Accounts payable 194,300 Accounts receivable 545,000 Accumulated depreciationoffice buildings and equipment 1,580,000 Accumulated depreciationstore buildings and equipment 4,126,000 Allowance for doubtful accounts 8,450 Available for sale investments (at cost) 260,130 Bonds payable. 5%. due 2024 500,000 Cash 246,000 Common stock, 20 par (400,000 shares authorized; 100,000 shares issued. 94,600 outstanding) 2,000,000 Dividends: Cash dividends for common stock 155,120 Cash dividends for preferred stock 100,000 Goodwill 500,000 Income tax payable 44,000 Interest receivable 1,125 Investment in Pinkberry Co. stock (equity method) 1,009,300 Investment in Dream Inc. bonds (long term) 90,000 Merchandise inventory [December 31, 2016). at lower of cost (FIFO) or market 778,000 Office buildings and equipment 4.320,000 Paid-in capital from sale of treasury stock 13,000 Excess of issue price over parcommon stock 886,800 Excess of issue price over parpreferred stock 150,000 Preferred 5% stock. 80 par (30,000 shares authorized; 20,000 shares issued] 1,600,000 Premium on bonds payable 19,000 Prepaid expenses 27,400 Retained earnings, January 1, 2016 9,319,725 Store buildings and equipment 12,560,000 Treasury stock (5,400 shares of common stock at cost of 33 per share) 178,200 Unrealized gain (loss) on available for sale investments (6,500) Valuation allowance for available for sale investments (6,500)Contributed Capital Adams Companys records provide the following information on December 31, 2019: Additional information: 1. Common stock has a 5 par value, 50,000 shares are authorized, 15,000 shares have been issued and are outstanding. 2. Preferred stock has a 100 par value, 3,000 shares are authorized, 800 shares have been issued and are outstanding. Two hundred shares have been subscribed at 120 per share. The stock pays an 8% dividend, is cumulative, and is callable at 130 per share. 3. Bonds payable mature on January 1, 2023. They carry a 12% annual interest rate, payable semiannually. Required: Prepare the Contributed Capital section of the December 31, 2019, balance sheet for Adams. Include appropriate parenthetical notes.
- Cash dividends on the 10 par value common stock of Garrett Company were as follows: The 4th-quarter cash dividend was declared on December 21, 2019, to shareholders of record on December 31, 2019. Payment of the 4th-quarter cash dividend was made on January 18, 2020. In addition, Garrett declared a 5% stock dividend on its 10 par value common stock on December 3, 2019, when there were 300,000 shares issued and outstanding and the market value of the common stock was 20 per share. The shares were issued on December 24, 2019. What was the effect on Garretts shareholders equity accounts as a result of the preceding transactions?Calculating the Number of Shares Issued Castalia Inc. issued shares of its $0.80 par value common stock on September 4, 2019, for $8 per share. The Additional Paid-In Capital-Common Stock account was credited for 5612,000 in the journal entry to record this transaction. Required: How many shares were issued on September 4, 2019?Common Dividends Thompson Payroll Service began in 2019 with 1,500,000 authorized and 820,000 issued and outstanding S8 par common shares. During 2019, Thompson entered into the following transactions: Declared a S0.20 per-share cash dividend on March 24. Paid the S0.20 per-share dividend on April 6. Repurchased 13,000 common shares for the treasury at a cost of S12 each on May 9. Sold 2,500 unissued common shares for $15 per share on June 19. Declared a $0.40 per-share cash dividend on August 1. Paid the $0.40 per-share dividend on September 14. Declared and paid a 10% stock dividend on October 25 when the market price of the common stock was $15 per share. Declared a 50.45 per-share cash dividend on November 20. Paid the $0.45 per-share dividend on December 20. Required: Prepare journal entries for each of these transactions. (Note: Round to the nearest dollar.) What is the total dollar amount of dividends (cash and stock) for the year? CONCEPTUAL CONNECTION Determine the effect on total assets and total stockholders equity of these dividend transactions.
- Statement of Stockholders' Equity At the end of 2019, Stanley Utilities Inc. had the following equity accounts and balances: During 2020, Stanley Utilities engaged in the following transactions involving its equity accounts: Sold 3,300 shares of common stock for $15 per share. Sold 1,000 shares of 12%, $100 par preferred stock at $105 per share. Declared and paid cash dividends of $8,000. Repurchased 1,000 shares of treasury stock (common) for $38 per share. Sold 400 of the treasury shares for $42 per share. Required: Prepare the journal entries for Transactions a through e. Assume that 2020 net income was $87,000. Prepare a statement of stockholders equity at December 31, 2020.Lyon Company shows the following condensed income statement information for the year ended December 31, 2019: Lyon declared dividends of 6,000 on preferred stock and 17,280 on common stock. At the beginning of 2019, 10,000 shares of common stock were outstanding. On May 1, 2019, the company issued 2,000 additional common shares, and on October 31, 2019, it issued a 20% stock dividend on its common stock. The preferred stock is not convertible. Required: 1. Compute the 2019 basic earnings per share. 2. Show the 2019 income statement disclosure of basic earnings per share. 3. Draft a related note to accompany the 2019 financial statements.Stock Dividend The balance sheet of Cohen Enterprises includes the following stockholders equity section: Required: On April 15, 2019, when its stock was selling for $18 per share, Cohen Enterprises issued a small stock dividend. After making the journal entry to recognize the stock dividend, Cohens total capital stock increased by $270,000. In percentage terms, what was the size of the stock dividend? Ignoring the small stock dividend discussed in Requirement 1, assume that on June 1, 2019, when its stock was selling for $22 per share, Cohen issued a large stock dividend. After making the journal entry to recognize the stock dividend, Cohens retained earnings decreased by $75,000. In percentage terms, what was the size of the stock dividend?
- Common stock transactions on the statement of cash flows Jones Industries received 600,000 from issuing shares of its common stock and 400,000 from issuing bonds. During the year, Jones Industries also paid dividends of 60,000. How are the effects of these transactions reported on the statement of cash flows?Treasury Stock, Cost Method Bush-Caine Company reported the following data on its December 31, 2018, balance sheet: The following transactions were reported by the company during 2019: 1. Reacquired 200 shares of its preferred stock at 57 per share. 2. Reacquired 500 shares of its common stock at 16 per share. 3. Sold 100 shares of preferred treasury stock at 58 per share. 4. Sold 200 shares of common treasury stock at 17 per share. 5. Sold 100 shares of common treasury stock at 9 per share. 6. Retired the shares of common stock remaining in the treasury. The company maintains separate treasury stock accounts and related additional paid-in capital accounts for each class of stock. Required: 1. Prepare the journal entries required to record the treasury stock transactions using the cost method. 2. Assuming the company earned a net income in 2019 of 30.000 and declared and paid dividends of 10,000, prepare the shareholders equity section of its balance sheet at December 31, 2019.The Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. Compute the stock’s earnings per share (EPS). What is the stock’s P/E ratio? Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.