Saved The equity sections from Atticus Group\'s 2017 and 2018 year-end balance s

Question

Saved The equity sections from Atticus Group's 2017 and 2018 year-end balance sheets follow Stockholders' Equity (December 31, 2017) Common stock-$6 par value, 100,ee0 shares authorized, 35,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 210,800 170,000 340,000 $ 720,00e stockholders' Equity (December 31, 2018) Common stock-$6 par value, 100,000 shares $246,000 194,000 440,000 880,000 (30,980) $850,000 authorized, 41,e00 shares issued, 5,e00 shares in treasury Paid-in capital in excess of par value, common stock Retained earnings ($30,e00 restricted by treasury stock) Less cost of treasury stock Total stockholders' equity The following transactions and events affected its equity during year 2018.

Explanation / Answer

Solution 1:

Common share outstanding on each dividend date:

Jan 5 = 35000 shares

Apr 5 = 35000 - 5000= 30000 shares

Jul 5 = 35000 - 5000= 30000 shares

Oct 5 = 30000 + 30000*20% = 36000 shares

Solution 2:

Solution 3:

Captialization amount of retained earning for stock dividend = Nos of shares in stock dividend * market price per share = 6000 * $10 = $60,000

Solution 4:

Per share cost of treasury stock purchased = $30,000 / 5000 = $6 per share

Solution 5:

Net income for 2018 = Ending retained earnings - Beginning retained earnings + stock dividend + cash dividends

= $440,000 - $340,000 + $60,000 + $52,400

= $212,400

Computation of cash dividend Particulars 5-Jan 5-Apr 5-Jul 5-Oct Outstanding shares 35000 30000 30000 36000 Dividend per share $0.40 $0.40 $0.40 $0.40 Cash dividend in dollar $14,000.00 $12,000.00 $12,000.00 $14,400.00

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