Chapter 13: Q24RQ (page 707)
What is the price/earnings ratio, and how is it calculated?
P/E Ratio also known as the price multiple, or the earnings multipleis computed by dividing the stock’s market price by the earnings per share.
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What is a prior-period adjustment?
What account is used to record the premium when issuing common stock? What type of account is this?
How does authorized stock differ from ouststanding stock?
Question: Journalizing a small stock dividend
Element Water Sports has 13,000 shares of \(1 par value common stock outstanding.
Element distributes a 5% stock dividend when the market value of its stock is \)15 per share.
Requirements
2. What is the overall effect of the stock dividend on Element’s total assets?
Question: Dividing cash dividends between preferred and common stock
Copperhead Trust has the following classes of stock:
Preferred Stock—6%, \(12 par value; 8,500 shares authorized, 7,000 shares issued and outstanding
Common Stock—\)0.10 par value; 2,100,000 shares authorized, 1,400,000 shares issued and outstanding
Requirements
1. Copperhead declares cash dividends of $44,000 for 2018. How much of the dividends goes to preferred stockholders? How much goes to common stockholders?
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