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    Book Value per share, Retained Earnings and Dividends

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    Prob 15-9A
    Ryniak Corporation's common shares are currently selling on a stock exchange at $85 per share; and a recent balance sheet shows the following information

    Ryniak Corporation
    Shareholder's Equity
    April 30,2011

    Contributed Capital:

    Preferred Shares, $2.50 cumulative, 1000 shares
    authorized, issued and outstanding....................................................$50,000
    Common shares, 4,000 shares authorized, issued, and outstanding.....80,000
    Total Contributed Capital........................................................................$130,000
    Retained Earnings..................................................................................$150,000
    Total Shareholder's Equity......................................................................$280,000

    To do:
    a) What is the market value of the corporation's common shares?
    b) How much capital was contributed by the residual owners of the company
    c) If no dividends are in arrears, what are the book values per share of the preferred shares and the common shares
    d) If two years preferred dividends are in arrears what are the book values per share of the preferred shares and the common shares?
    e) If two year's preferred dividends are in arrears and the preferred shares are callable at $55 per share what are the book values per share of the preferred shares and the common shares?
    f) If two years preferred dividends are in arrears and the board of directors declares dividends of $10,000 what total amount would will be paid to preferred and common shareholders? What is the amount of dividends per share for the common shares?

    Prob 15-2B
    The equity sections from the 2011 and 2012 balance sheets of Henns Corporation appeared as follows:

    Henns Corporation
    Shareholders' Equity
    December 31, 2011

    Contributed Capital:

    Common shares, unlimited shares authorized,
    350,000 shares issued............................................................$8,750,000
    Retained Earnings......................................................................1,960,720
    Total Shareholders equity...........................................................$10,710,720

    Henns Corporation
    Shareholders Equity
    December 31, 2012

    Contributed capital:

    Common shares, unlimited shares authorized,
    385,000 shares issued.......................................................$9,660,000
    Retained Earnings...............................................................2,200,500
    Total Shareholders Equity................................................$11,860,500

    On February 11, May 24, August 13, and again on December 12, 2012, the board of directors declared $0.25 per share cash dividends on the outstanding shares. 15,000 common shares were issued on August 1, 2012 and another 20,000 were issued on November 2, 2012

    Required: Under the assumption that there were no transactions affecting retained earnings other than the ones given, determine the 2012 net income of Henns Corporation. Show your calculations.

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    Solution Summary

    The solution determines the book value per share, retained earnings and dividends from the 2012 net income.

    $2.19

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