Frey and Felder has sales in excess of $83 billion and sells products that are p

Question

Frey and Felder has sales in excess of $83 billion and sells products that are part of most of our daily lives. A recent annual report for F&F contained the following information.

a. Retained earnings at the end of 2013 totaled $80,697 million

b. Net income for 2014 was $11,893 million

c. Par value of the stock is $1 per share

d. Cash dividends declared in 2014 were $6,900 million

e. The common stock account totaled $4,059 million at the end of 2014 and $4,059 million at the end of 2013

Assume that no other information concerning stockholders' equity is relevant:

Required:

1. Estimate the number of shares issued at the end of 2014.

2. Estimate the amount of retained earnings at the end of 2014.

Explanation / Answer

1. Since there is no change in Common share account i.e the equity account at the fare value the company didnot issue any share in the year 2014. The total no of shares issued at the end of 2014 are 4059 million shares.

No of shares issued = Common stock account/ par value of share.

assuming all shares are fully paid shares

No of shares issued= 4059 million/1

2. The amount of retained earning are

Amount in Millions.

Retained earnings at the end of 2013 = 80,697

ADD income for 2014 = 11,893

Less Cash dividends for 2014 = (6,900)

Retained earnings at the end of 2014 = 85,690 million

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