Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 10, Problem 10.4AP
1.
To determine
To identify: The numbers of shares of preferred stock have been issued.
1.
Expert Solution
Answer to Problem 10.4AP
Number of preferred stock issued by the V World is 6,000,000 shares.
Explanation of Solution
Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.
Compute the number of preferred stock issued by the V World:
Hence, the number of preferred stock issued by the V World is 6,000,000 shares.
2.
To determine
To identify: The numbers of shares of common stock have been issued.
2.
Expert Solution
Answer to Problem 10.4AP
Number of common stock issued by the V World is 30,000,000 shares.
Explanation of Solution
Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.
Compute the number of common stock issued by the V World:
Hence, the number of common stock issued by the V World is 30,000,000 shares.
3.
To determine
The average price per share at which the preferred share would have been issued.
3.
Expert Solution
Answer to Problem 10.4AP
Average price per share for which the preferred share would have been issued is $50.
Explanation of Solution
Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.
Step 1: Calculate total paid in capital for common stock.
Step 2: Calculate total paid in capital for preferred stock.
Step 3: Calculate the average price per share for which the preferred share would have been issued.
Hence, the average price per share for which the preferred share would have been issued is $50.
4.
To determine
The amount of net income for the year.
4.
Expert Solution
Answer to Problem 10.4AP
The amount of net income for the year is $68,000.
Explanation of Solution
Net income: Net income is the excess amount of revenue which arises after deducting all the expenses of a company. In simple terms, it is the difference between total revenue and total expenses of the company.
Determine the amount of net income for the year as follows:
Hence, the amount of net income for the year is $68,000.
5.
To determine
The average cost per share of the treasury stock acquired.
5.
Expert Solution
Answer to Problem 10.4AP
Average cost per share of the treasury stock acquired is $32.
Explanation of Solution
Treasury Stock: It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement.
Hence, the average cost per share of the treasury stock acquired is $32.
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Students have asked these similar questions
Required information
[The following information applies to the questions displayed below.]
The stockholders' equity section of Velcro World is presented here.
VELCRO WORLD
Balance Sheet (partial).
($ and shares in thousands)
Stockholders' equity:
Preferred stock, $1 par value
Common stock, $1 par value
Additional paid-in capital
Total paid-in capital
$
4,300
13,000
293,600
310,900
271,000
(180,000)
Retained earnings
Treasury stock, 12,000 common shares
Total stockholders' equity
$ 401,900
Based on the stockholders' equity section of Velcro World, answer the following questions. Remember that all amounts are
presented in thousands.
4. If retained earnings at the beginning of the period was $233 million and $13 million was paid in dividends during the year, what was
the net income for the year? (Enter your answer in million (i.e., 5,000,000 should be entered as 5).)
Net income
million
Required information
[The following information applies to the questions displayed below.]
The stockholders' equity section of Velcro World is presented here.
VELCRO WORLD
Balance Sheet (partial)
($ and shares in thousands)
Stockholders' equity:
Preferred stock, $1 par value
Common stock, $1 par value
Additional paid-in capital
Total paid-in capital
Retained earnings
Treasury stock, 11,000 common shares
Total stockholders' equity
$6,000,000
30,000,000
1,164,000,000
1,200,000,000
288,000,000
(352,000,000)
$1,136,000,000
Based on the stockholders' equity section of Velcro World, answer the following questions. Remember that all amounts
are presented in thousands.
5. What was the average cost per share of the treasury stock acquired?
Average cost
per share
Use the Stockholders' Equity section of FSB's Balance Sheet to answer the questions below.
FSB Enterprises
Balance Sheet (partial)
At December 31, 202A
Stockholders' Equity:
Preferred stock (Par $100)
1,000,000
120,000
Common stock (Par $0.20)
Additional Paid in capital
8,915,000
Total paid in capital
10,035,000
Retained earnings
1,400,000
-54,000
Treasury stock (3,000 common shares)
Total stockholders equity
11,381,000
1 How many shares of preferred stock have been issued?
2a How many shares of common stock have been issued?
2b How many of the common shares are outstanding?
Chapter 10 Solutions
Financial Accounting
Ch. 10 - Corporations typically do not first raise capital...Ch. 10 - What is the difference between a public and a...Ch. 10 - Prob. 3RQCh. 10 - Which form of business organization is most...Ch. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - 7.Explain the difference between authorized,...Ch. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - What are the three potential features of preferred...
Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - How is the accounting for a repurchase of a...Ch. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Prob. 17RQCh. 10 - 18.What happens to the par value, the shares...Ch. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 10.1BECh. 10 - Prob. 10.2BECh. 10 - Record issuance of common stock (LO102) Western...Ch. 10 - Prob. 10.4BECh. 10 - Prob. 10.5BECh. 10 - Recognize preferred stock features (LO103) Match...Ch. 10 - Prob. 10.7BECh. 10 - Prob. 10.8BECh. 10 - Prob. 10.9BECh. 10 - Record cash dividends (LO105) Divine Apparel has...Ch. 10 - Prob. 10.11BECh. 10 - Prob. 10.12BECh. 10 - Indicate effects on total stockholders equity...Ch. 10 - Prepare the stockholders equity section (LO107)...Ch. 10 - Prob. 10.15BECh. 10 - Prob. 10.1ECh. 10 - Prob. 10.2ECh. 10 - Prob. 10.3ECh. 10 - Prob. 10.4ECh. 10 - Record common stock, preferred stock, and dividend...Ch. 10 - Prob. 10.6ECh. 10 - Prob. 10.7ECh. 10 - Record cash dividends (LO105) On March 15,...Ch. 10 - Prob. 10.9ECh. 10 - Record stock dividends and stock splits (LO106) On...Ch. 10 - Prob. 10.11ECh. 10 - Prob. 10.12ECh. 10 - Indicate effects on total stockholders equity...Ch. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Prob. 10.16ECh. 10 - Prob. 10.1APCh. 10 - Prob. 10.2APCh. 10 - Indicate effect of stock dividends and stock...Ch. 10 - Prob. 10.4APCh. 10 - Prob. 10.5APCh. 10 - Prob. 10.6APCh. 10 - Prob. 10.7APCh. 10 - Match terms with their definitions (LO101 to 108)...Ch. 10 - Prob. 10.2BPCh. 10 - Prob. 10.3BPCh. 10 - Prob. 10.4BPCh. 10 - Prob. 10.5BPCh. 10 - Prob. 10.6BPCh. 10 - Prob. 10.7BPCh. 10 - Prob. 10.1APCPCh. 10 - Prob. 10.2APFACh. 10 - Prob. 10.3APFACh. 10 - Prob. 10.4APCACh. 10 - Ethics Put yourself in the shoes of a company...Ch. 10 - Written Communication Preferred stock has...Ch. 10 - Prob. 10.8APEM
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