Chapter 13: Q17SE (page 711)
Computing price/earnings ratio Refer to the HEB data in Short Exercise S13-17. Assume the market price of HEB’s common stock is $19.50 per share. Compute HEB’s price/earnings ratio.
The price/ earnings ratio of the corporation is $6
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A Identifying sources of equity, stock issuance, and dividends
Voyage Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet at June 30, 2018:
Preferred Stock—7%, ? Par Value; 625,000 shares
authorized, 280,000 shares issued and outstanding
Paid-In Capital:
\( 1,400,000
1,340,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 2,900,000
Total Paid-In Capital 5,640,000
Retained Earnings 12,000,000
Total Stockholders’ Equity \) 17,640,000
Common Stock—$1 Par Value; 3,000,000 shares
authorized, 1,340,000 shares issued and outstanding
Requirements
3. Make two summary journal entries to record issuance of all the Voyage Comfort Specialists’ stock for cash. Explanations are not required.
What are the basic rights of stockholders?
Journalizing a stock dividend and reporting stockholders’ equity
The stockholders’ equity of Lakeside Occupational Therapy, Inc. on December 31, 2017, follows:
Common Stock—\(1 Par Value; 1,200 shares
authorized, 400 shares issued and outstanding
Paid-In Capital:
120,000
400
2,000
Retained Earnings
Total Stockholders’ Equity \) 122,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 1,600
Total Paid-In Capital
\(
On April 30, 2018, the market price of Lakeside’s common stock was \)16 per share and the company declared a 13% stock dividend. The stock was distributed on May 15.
Requirements
1. Journalize the declaration and distribution of the stock dividend.
2. Prepare the stockholders’ equity section of the balance sheet as of May 31, 2018. Assume Retained Earnings are $120,000 on April 30, 2018, before the stock dividend, and the only change made to Retained Earnings before preparing the balance sheet was closing the Stock Dividends account.
Journalizing issuance of stock and preparing the stockholders’ equity section of the balance sheet
The charter of Evergreen Corporation authorizes the issuance of 900 shares of preferred stock and 1,400 shares of common stock. During a two-month period, Evergreen completed these stock-issuance transactions:
Mar. 23 Issued 230 shares of \(3 par value common stock for cash of \)15 per share.
Apr. 12 Received inventory with a market value of \(27,000 and equipment with a market value of \)19,000 for 320 shares of the \(3 par value common stock.
17 Issued 900 shares of 5%, \)20 par value preferred stock for \(20 per share.
Requirements
2. Prepare the stockholders’ equity section of the Evergreen balance sheet as of April 30, 2018, for the transactions given in this exercise. Retained Earnings has a balance of \)73,000 at April 30, 2018
A Identifying sources of equity, stock issuance, and dividends
Voyage Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet at June 30, 2018:
Preferred Stock—7%, ? Par Value; 625,000 shares
authorized, 280,000 shares issued and outstanding
Paid-In Capital:
\( 1,400,000
1,340,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 2,900,000
Total Paid-In Capital 5,640,000
Retained Earnings 12,000,000
Total Stockholders’ Equity \) 17,640,000
Common Stock—\(1 Par Value; 3,000,000 shares
authorized, 1,340,000 shares issued and outstanding
Requirements
4. No preferred dividends are in arrears. Journalize the declaration of a \)500,000 dividend at June 30, 2018, and the payment of the dividend on July 20, 2018. Use separate Dividends Payable accounts for preferred and common stock. An explanation is not required.
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