PROBLEM NO. 1 Watusi Inc. began operations in January 2021 and reported the following results for each of its 3 years of operations. 2021 P260,000 net loss P40,000 net loss 2022 2023 P700,000 net income At December 31, 2023, Watusi Inc. share capital accounts were as follows. P500,000 Share Capital-Preference, 6% cumulative, par value P100; authorized, issued, and outstanding 5,000 shares 750,000 Share Capital-Ordinary, par value P1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares Watusi Inc. has never paid a cash or share dividend. There has been no change in the share capital accounts since Watusi began operations. The country law permits dividends only from retained earnings.

PROBLEM NO. 1 Watusi Inc. began operations in January 2021 and reported the following results for each of its 3 years of operations. 2021 P260,000 net loss P40,000 net loss 2022 2023 P700,000 net income At December 31, 2023, Watusi Inc. share capital accounts were as follows. P500,000 Share Capital-Preference, 6% cumulative, par value P100; authorized, issued, and outstanding 5,000 shares 750,000 Share Capital-Ordinary, par value P1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares Watusi Inc. has never paid a cash or share dividend. There has been no change in the share capital accounts since Watusi began operations. The country law permits dividends only from retained earnings.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 24E

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On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.
Hyde Corporations capital structure at December 31, 2018, was as follows: On July 2, 2019, Hyde issued a 10% stock dividend on its common stock and paid a cash dividend of 2.00 per share on its preferred stock. Net income for the year ended December 31, 2019, was 780,000. What should be Hydes 2019 basic earnings per share? a. 7.80 b. 7.09 c. 7.68 d. 6.73
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.
Leverage Cook Corporation issued financial statements at December 31, 2019, that include the following information: Balance sheet at December 31,2019 Assets $8,000,000 Liabilities $1,200,000 Stockholders' equity (300,000 shares) $6,800,000 Income statement for 2019: Income from operations $1,200,000 Less: Interest expense (100,000) Income before taxes $1,100,000 Less: Income taxes expense (0,30) (330,000) Net income $ 770,000 The levels of assets, liabilities, stockholders' equity, and operating income have been stable in recent years; however, Cook Corporation is planning a 51,800,000 expansion program that will increase income from operations by $350,000 to $1,550,000, Cook is planning to sell 8.5% notes at par to finance the expansion. Required: What earnings per share does Cook report before the expansion?
Watusi Inc. began operations in January 2021 and reported the following results for each of its 3 years of operations. P260,000 net loss P40,000 net loss P700,000 net income 2021 2022 2023 At December 31, 2023, Watusi Inc. share capital accounts were as follows. Share Capital-Preference, 6% cumulative, par value P100; authorized, issued, and outstanding 5,000 shares Share Capital-Ordinary, par value P1.00; authorized 1,000,000 shares; issued and outstanding 750,000 shares P260,000 750,000 Watusi Inc. has never paid a cash or share dividend. There has been no change in the share capital accounts since Watusi began operations. The country law permits dividends only from retained earnings. Instructions a. Compute the book value of the ordinary shares at December 31, 2023. b. Compute the book value of the ordinary shares at December 31, 2023, assuming that the preference shares have a liquidating value of P106 per share.
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Shilling Company reports the following information for its fiscal year end of March 31,2019:Common stock, $0.01 par value per share $57 millionPaid-in capital in excess of par - CommonRetained earnings 400 millionTotal stockholders' equity $757 million300 millionWhat is the total paid-in capital for Shilling Company at March 31, 2019?a. $57 millionb. $300 millionc. $357 milliond. $757 million
An entity began operations January 1, 2015 and reported the following net income or loss for five years of operations: 2015 1,500,000 loss 2016 1,300,000 loss 2017 1,200,000 loss 2018 4,500,000 income 2019 9,000,000 income On December 31, 2019, the capital accounts were: Preference share capital, P100 par, 12% participating and cumulative, 100,000 shares 10,000,000 Preference share capital P100 par, 10% nonparticipating, Noncumulative, 50,000 shares 5,000,000 Ordinary share capital, P10 par, 1,000,000 shares 10,000,000 The entity has never paid cash or share dividend. The capital accounts have not changed since the entity began operations. If the maximum amount available for cash dividends is declared on December 31, 2019, what amount of dividend is payable to 12% Preference Shareholders? 10% Preference Shareholders?
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