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Paying dividends to common stockholders

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4. A corporation has a year end 2008 retained earnings balance of \$220,000. The firm reported net profits after taxes of \$50,000 in 2009 and paid dividends in 2009 of \$30,000. The firm's retained earnings balance at year end 2009 is ______.
A. \$240,000
B. \$250,000
C. \$270,000
D. \$300,000

29. The board of directors of the National Computer Company has declared a \$5.00 common stock dividend and accepted a plan to freeze the dividend at \$5 per year indefinitely. What is the value of the National Computer Company's common stock if the required rate of interest is 15 percent?

30. Kingston Kitchen Stuff has recently sold 1,000 shares of \$10.75 preferred stock. What is the value of the stock assuming 10 percent required rate of return?

34. The nominal rate of interest is composed of
A) the real rate plus an inflationary expectation.
B) the real rate plus a risk premium.
C) the risk-free rate plus an inflationary expectation.
D) the risk-free rate plus a risk premium.

36. C. Edward Accounting Services has an outstanding issue of 1,000 shares preferred stock with a \$100 par value, an 8 percent annual dividend, and 5,000 shares of common stock outstanding. If the stock is cumulative and the board of directors has passed the preferred dividend for the last two years, how much must preferred stockholders be paid prior to paying dividends to common stockholders?

https://brainmass.com/math/logic/paying-dividends-common-stockholders-571955

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4. A corporation has a year end 2008 retained earnings balance of \$220,000. The firm reported net profits after taxes of \$50,000 in 2009 and paid dividends in 2009 of \$30,000. The firm's retained earnings balance at year end 2009 is ______.
A. \$240,000
B. \$250,000
C. \$270,000
D. \$300,000
Retained earnings balance= Opening Retained earnings + Retained earnings of year 2009
Retained earnings of year 2009= 50000-30000
=\$20000
Retained earnings= 220000+20000
=\$240000

29. The board of ...

Solution Summary

The solution helps solve equations regarding how preferred stockholders might be paid prior to paying dividends to common stockholders

\$2.19

Stockholders' Equity and Transaction's Effect

On January 1, 2008, Fredriksen Inc.'s Stockholders' Equity category appeared as follows
prefered stock, \$80 par value, 7%
3,000 shares issued and outstanding \$ 240,000
Common Stock, \$10 par value
15,000 shares issued and outstanding 150,000
Total contributed capital 675,000
Retained Earnings 2,100,000
Total stockholders equity 2,775,000

The Preferred stock is noncumulative and nonparticipating. During 2008, the following transactions occurred:
a. On March 1, declared cash dividend of \$16,800 on preferred stock. Paid the dividend on April 1.
b. On June 1, declared 55 stock dividend on common stock. The current market price of the common stock was \$18. The stock was issued on July 1.
c. On September 1, declared a cash dividend of \$0.50 per share on the common stock: paid the dividend on October 1.
d. On December 1, issued a 2-for-1 stock split of common stock when the stock was selling for \$50 per share.

Required
1. Explain each transaction's effect on the Stockholders equity accounts and the total stockholders equity
2. Develop the Stockholder's equity category of the December 31, 2008, balance sheet. Assume that the net income for the year was \$650,000.
3. Write a paragraph that explain the difference between a stock dividend and a stock split.

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