Question

The stockholders' equity accounts of Swifty Corporation on January 1, 2017, were as follows. Preferred Stock (7%, $100 par noncumulative, 11,000 shares authorized) Common Stock ($4 stated value, 660,000 shares authorized) Paid-in Capital in Excess of Par Value-Preferred Stock Paid-in Capital in Excess of Stated Value-Common Stock Retained Earnings Treasury Stock (11,000 common shares) $660,000 2,200,000 33,000 1,056,000 1,513,600 88,000 During 2017, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. 1 Issued 11,000 shares of common stock for $66,000. Mar. 20 Purchased 2,200 additional shares of common treasury stock at $7 per share. Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1. Nov. 1 Paid the dividend declared on October 1. Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017. Dec. 31 Determined that net income for the year was $515,000. Paid the dividend declared on December 1.

Answer 1

DE N Debit ($) Credit ($) $66,000 $44,000 $22.000 + $15,400 $15,400 $46,200 11 A B Journal Entries Date Account Titles 1-Feb Cash Common Stock Paid-in Capital in excess of par, common Stock (To record the common stock issued) 20-Mar Treasury Stock, Common Cash (To record the shares repurchased) 1-Oct Cash Dividends Dividends Payable (To record preferred dividend declared) 1-Nov Dividends Payable Cash (To record preferred dividends paid) 1-Dec Cash Dividends Dividends Payable (To record common stock dividend declared) 31-Dec Income Summary Retained Earnings (To close the net income) 31-Dec Dividends Payable $46,200 13 $46,200 $46,200 $279,400 $279.400 $515,000 $515,000 $279,400 Cash $279,400 (To record the dividends paid)

Preferred Stock 1/1/2017 12/31/2017 $660,000 $660,000 Common Stock 1/1/2017 2/1/2017 12/31/2017 $2,200,000 $44,000 $2,244,000 lid-in Capital in Exces of par vahie - Preferred Sto 1/1/2017 $33,000 12/31/2017 $33,000 14 d-in Capital in Exces of stated value - Common St 15 1/1/2017 $1,056,000 2/1/2017 $22,000 12/31/2017 $1,078,000 Retained Earnings 12/31/2017 $325,600 1/1/2017 $1,513,600 12/31/2017 $515,000 12/31/2017 $1,703,000 Cash Dividends $46,200 12/31/2017 $279,400 10/1/2017 12/1/2017 $325,600 Treasury Stock 1/1/2017 3/20/2017 12/31/2017 $88,000 $15,400 $103,400

$2,244,000 $660,000 $2,904,000 SWIFTY CORPORATION Partial Balance Sheet as of December 31, 2017 4 Stockholder's Equity 5 Contributed Capital 6 Paid-in Capital 7 Common Stock 8 Preferred Stock 9 Total Paid-in Capital 10 Additional Paid-in Capital 11 Paid-in Capital in Exces of par value - Preferred Stock 12 Paid-in Capital in Exces of stated value - Common Stock 13 Total Additional Paid in Capital 14 Total Contributed Capital 15 Retained Earnings 16 Total Contributed Capital 17 Less: Treasury Stock, Common 18 Total Stockholder's Equity 19 $33.000 $1,078,000 $1,111,000 $4,015,000 $1,703,000 $5,718,000 $103.400 $5,614,600

1 No. of Shares outstanding =($2,200,000/$)+11,000 - 2,200 558.800 4 Earnings per share =Net Income /No. of share outstanding $515,000 / 558.800 shares $0.92 8 Payout Ratio =Dividends per share / Earnings per share =$0.50 / $0.92 0.54 10 12 Return on Common stockholder's equity 13 Net Income / Common Stock =$515,000 / ($2,244,000 - $103,400) 24.06% 14 15

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Answer 2

Fixes for the above answer

1st Section:

The second cash Dividends should be 273,900 (2200000/4=550000 -> 550000+11000-(11000+2200)*0.50=273,900).

2nd Section:

Treasury stock is a debit, not a credit.

3rd Section:

Should be "Paid in Capital" instead of "Contributed Capital"

Should be "Capital Stock" instead of "Paid in Capital"

Should be "Total Capital Stock" instead of "Total Paid in Capital"

Should be "Total Paid in Capital" instead of "Total Contributed Capital"

Stockholders' Equity should be 1708500

4th Section:

All of them are wrong, I don't know the right answers.

Answer 3

4th Section:

Payout Ratio: 53.18%

EPS: $0.86

Return on Common Stockholders' Equity: 9.76%