JKL. Hotel Company had the following stockholders\' equity section on the Decemb
ID: 2572020 • Letter: J
Question
JKL. Hotel Company had the following stockholders' equity section on the December 31, 2016 balance sheet: Preferred stock, $100 par, 6% cumulative Common stock, $2 par value Paid-in capital in excess of par, common stock Retained earnings Treasury Stock @ $10.00 $1,250,000 800,000 3,500,000 3.467.000 50,000) 8,967,000 Total a. How many shares of common stock are issued? How many shares of common stock are outstanding? c. How many shares of preferred stock are outstanding? d. What was the average selling price of a share of common stock? What was the amount of dividends declared for common stock if the retained earnings balance of January 1, 2016 was $ 2,500,000 and net income for the year ended December 31, 2016 was $120,000? e. If $150,000 of dividends were declared and no dividends were in arrears, how much of that amount would go to the common shareholders, assuming 100% distribution and prepare journal entries for it? e.Explanation / Answer
ReqA:
Common stock $ 800,000
Par value is $ 2 per share
Number of common shares issued (800,000 /2) = 400,000 common shares
Req B: Common shares issued 400,000
Less: Balance of shares in Treasury account($50,000 @ 10 per share) = 5,000 shares
Therefore, common shares outstanding (400,000 -5,000) = 395,000 shares
Rec: Preferred stock capital $ 1250,000
Par value of preferred stock $ 100 per share
Number of preferred shares outstanding (1250,000 /100 ) = 12,500 shares
ReqD:
Total amount received from issue of 400,000 common shares:
Common stock capital $800,000
Add: Paid in capital in excess of par value $ 3500,000
Total amount received for 400,000 common shares $ 4300,000
Amount received per share (4300,000/400,000) = $10.75 per common share
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