Question

Stockholders' Equity (January 1 Common stock-$5 par value, 100,000 shares authorized, 35,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $175,000 135,000 340,000 $650,809 Stockholders' Equity (December 31) Common stock-$5 par value, 100,000 shares authorized, 41,200 shares issued, 4,000 shares in treasury Paid-in capital in excess of par value, common stock Retained earnings ($60,000 restricted by treasury stock) $206,000 178,400 400,000 784,400 (60,000) $724,400 Less cost of treasury stock Total stockholders' equity The following transactions and events affected its equity during the year. Jan. 5 Declared a $0.50 per share cash dividend, date of record January 10. Mar. 20 Purchased treasury stock for cash. Apr. 5 Declared a $0.50 per share cash dividend, date of record April 10. July 5 Declared a $0.50 per share cash dividend, date of record July 10. July 31 Declared a 20% stock dividend when the stock's market value was $12 per share. Aug. 14 Issued the stock dividend that was declared on July 31. Oct. 5 Declared a $0.50 per share cash dividend, date of record October 10.

Answer 1

1) Outstanding shares

	Jan 5	Apr 5	July 5	Oct 5
Outstanding shares	35000	35000-4000 = 31000	31000	31000*1.2 = 37200

2) Cash dividend

	Jan 5	Apr 5	July 5	Oct 5
Cash dividend	17500	15500	15500	18600

3) Capitalization amount = 31000*20%*12 = 74400

4) Cost per share = 60000/4000 = 15 per share

5) Net income = 340000-67100-74400-400000 = 201500