The financial statements for Wesley Corp. included the following selected financ
ID: 2444038 • Letter: T
Question
The financial statements for Wesley Corp. included the following selected financial information from the stockholders’ equity section of the balance sheet at the end of YEAR 1:Common Stock, $.05 par value: $400,000
Additional Paid-in-Capital in excess of par: $71,600,000
Retained Earnings: $4,800,000
1.Assume the company declared and paid dividends of $500,000 during year 2. What was the amount of net income earned in year 2?
2.What is the amount of earnings per share in year 2?
3. Answer A-E below for the stockholders’ equity section of the balance sheet at the end of YEAR 2.
What is-
A) Common Stock, $.05?
B) Number of shares?
C) Number of of shares outstanding?
D) Additional Paid-in-capital in excess of par?
E) Treasury Stock?
Retained Earnings = $9,400,000 (Yr. 2)
Explanation / Answer
1,Net income earned in year 2. $5,100,000 Working: Retained earnings(Yr,2) $9,400,000 Add: Dividends 500,000 _________ 9,900,000 Less:Opening retained earnings 4,800,000 _________ Net income in year 2 5,100,000 2.The amount of earning per share in year 2 Earning per share = Net income - Preferred stock dividends/Average common shares outstanding = $5,100,000 - 500,000/4,004,225 (400,000/0.05=8,000,000 shares = 1.15 600,000/71=8,450 shares) 3. A) common stock = $400,000/0.05 = 8,000,000shares B)Number of shares = 8,000,000 + 8,450 =8,008,450 C)Number of shares outstanding 8,008,450 D)Additional paid-in capital in excess of$71, 600,000 E)Treasury stock $200,000 ($600,000 - $400,000)Related Questions
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