The stockholders' equity accounts of Whispering Winds Corp. on January 1, 2022, were as follows. Preferred...

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The stockholders equity accounts of Whispering Winds Corp. on January 1, 2022, were as follows. Preferred Stock (7%, $100 pa

Calculate the payout ratio, earnings per share, and return on common stockholders equity. (Note: Use the common shares outst

business accounting

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Answer 1

Answer #1

Working Note- Whispering Winds Corp.
	2022	2021
Preferred stock	$360,000	$360,000
Common stock (1200000+24000)	$1,224,000	$1,200,000
Paid in capital in excess of par - Preferred stock	$18,000	$18,000
Paid in capital in excess of stated value - Common stock (576000+12000)	$588,000	$576,000

Total paidup capital	$2,190,000	$2,154,000
Add:Retained earnings (825600+335000-(3600007%)-(0.50(300000+6000-6000-1200)	$986,000	$825,600
	$3,176,000	$2,979,600
Less: Treasury stock (48000+8400)	-$56,400	-$48,000
Total	$3,119,600	$2,931,600

Average Common Stock holder Equity= ((3119600-360000-18000)+(2931600-360000-18000))/2= $2647600

Return on Common stockholder Equity= (Net Income - Preferred dividend)/ Average Common Stockholder Equity

=(335000-25200)/2647600=11.70%

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Answer 2

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