Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 20Y6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You’ve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution of the stock dividend is made. The company has two classes of stock: common stock and cumulative preferred stock.
You’ve been able to retrieve the following information so far:
Number of common shares authorized | 800,000 |
Number of common shares issued | 650,000 |
Par value of common shares | $20 |
Par value of cumulative preferred shares | $30 |
Paid-in capital in excess of par-common stock | $7,000,000 |
Paid-in capital in excess of par-preferred stock | $0 |
Total retained earnings before the stock dividend is declared | $33,500,000 |
No treasury shares have been reissued. |
Total Cash |
Preferred Dividends |
Common Dividends |
|||
Year |
Dividends |
Total |
Per Share |
Total |
Per Share |
20Y1 | $20,000 | $20,000 | $0.20 | $0 | $0.00 |
20Y2 | 36,000 | 36,000 | 0.36 | 0 | 0.00 |
20Y3 | 79,000 | 34,000 | 0.34 | 45,000 | 0.09 |
20Y4 | 105,000 | 30,000 | 0.30 | 75,000 | 0.15 |
20Y5 | 120,000 | 30,000 | 0.30 | 90,000 | 0.18 |
20Y6 | 180,000 | 30,000 | 0.30 | 150,000 | 0.30 |
Cash Dividends
The accounting manager for the company prepared the schedule of cash dividends paid from 20Y1 to 20Y6 on the Pranks, Inc. panel. However, one of the reasons for Pranks, Inc.’s missing information is that the manager is away on vacation and is unreachable by phone, because he is backpacking on a remote island that does not have cell phone reception. Management would like you to determine some information from the data you’ve collected regarding its outstanding stock.
Fill in the following answers.
How many shares of common stock are outstanding? | 500,000 |
How many shares of preferred stock are outstanding? | 100,000 |
What is the preferred dividend as a percent of par? | 1% |
Points:
3 / 3
Additional Question
Shaded cells have feedback.
In which years has Pranks, Inc. paid cumulative preferred dividends in arrears? Check all that apply.
Year 1
Year
2
Year
3
Year 4
Year 5
Year 6
Points:
1 / 1
Stock Dividend
The company declared a 4% common stock dividend on December 1, and would like you to compute the following pieces of missing information. The market value of the common shares is $25.00 on December 1, and is $30.00 on the actual distribution date of the stock, December 31.
Fill in the missing information in the following table, using the information given and your work on the other panels. All “before” items are before the stock dividend was declared. All “after” items are after the stock dividend was declared and closing entries were recorded at the end of the year.
Total paid-in capital before the stock dividend | $20,000.00 |
Total retained earnings before the stock dividend | $33,500,00 |
Total stockholders’ equity before the stock dividend | $53,500.00 |
Total paid-in capital after the stock dividend | $??????.?? |
Total retained earnings after the stock dividend | $??????.?? |
Total stockholders’ equity after the stock dividend | $??????.?? |
1)
Number of Common Stock Outstanding = Total Common Stock Dividend Paid in 20Y6/Dividend Paid Per Share = 120,000/0.30 = 400000 shares
Number of Preferred Stock Outstanding = Total Preferred Dividend Paid in 2016/Dividend Paid Per Share = 30,000/0.30 = 100000 shares
Preferred Dividend as a Percent of Par = (Preferred Dividend Per Share)/Par Value*100 = 0.30/30*100 = 1%
Part 2)
The value of paid-in capital before stock dividend, total retained earnings before stock dividend and total stockholder's equity before stock dividend is given below:
Total Paid-in Capital (Common Stock) [400,000*20 + 7,000,000] | 15,000,000 |
Total Paid-in Capital (Preferred Stock) [100,000*30] | 3,000,000 |
Total Paid-in Capital Before Stock Dividend | 20,000,000 |
Retained Earnings before Stock Dividend | 33,500,000 |
Total Stockholder's Equity before Stock Dividend [20,000,000 + 33,500,000] | 53,500,000 |
The value of paid-in capital after stock dividend, total retained earnings after stock dividend and total stockholder's equity after stock dividend is given below:
Total Paid-in Capital (Common Stock) [400,000*20 + 7,000,000 + 400,000*4%*20] | 15,320,000 |
Total Paid-in Capital (Preferred Stock) [100,000*30] | 3,000,000 |
Total Paid-in Capital after Stock Dividend | 18,320,000 |
Retained Earnings after Stock Dividend [33,500,000 - 400,000*4%*25] | 33,100,000 |
Total Stockholder's Equity before Stock Dividend [20,000,000 + 33,500,000 + (120,000 - 100,000)] | 53,520,000 |
3)
1)
Yes, because the number of shares issued (650,000) is greater than the number of shares outstanding (400,000).
2)
The annual preferred dividend is $30,000 (100,000*0.30). The company paid a dividend of $40,000 in Year 2011. The balance amount of $10,000 (100,000*0.30 - 20,000) in arrears for 2011 is paid as follows:
Year 20Y2 = 36,000 - 30,000 = $6,000
Year 20Y3 = 34,000 - 30,000 = $4,000
Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The...
Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year 6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You’ve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution of the stock dividend is made. The company has two...
please help
Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 20Y6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You've been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution of the stock dividend is made. The company has...
Pranks, Inc. Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout 2016, and is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You've been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be calculated before the distribution of the stock dividend is made. The company has two classes of...
Mastery Problem: Corporations: Organization, Stock Transactions, and Dividends Pranks, Inc. Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year 6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You’ve been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution...
Mastery Problem: Corporations: Organization, Stock Transactions, and Dividends Pranks, Inc. Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year 6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You've been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be determined before the distribution...
Need help ASAP, please
Mastery Problem: Corporations: Organization, Stock Transactions, and Dividends Pranks, Inc. Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year 6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You've been brought in as a consultant to assist with this process, and also to help determine whether some missing information can be...
please show steps
Assignment 2 Homework Calculator Mastery Problemi CorporationsOrganization, Stock Transactions, and Dividends Pranks, Inc. Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year, the current year. It is declaring a stock dividend to its stockholders as the calendar year-end approaches. You've been brought in as a constant to assist with this process, and also to help determine whether some missing information can be...
PLEASE HELP!!!! Please read the information very carefully.
Mastery Problem: Corporations: Organization, Stock Transactions, and Dividends Pranks, Inc. Pranks, Inc. is a manufacturer of joke and novelty products for perpetrators of practical jokes. The corporation has paid several cash dividends throughout Year 6, the current year. It is also declaring a stock dividend to its stockholders as the calendar year-end approaches. You've been brought in as a consultant to assist with this process, and also to help determine whether some...
Number of common shares authorized800,000Number of common shares issued650,000Par value of common shares$20Par value of cumulative preferred shares$30Paid-in capital in excess of par-common stock$7,000,000Paid-in capital in excess of par-preferred stock$0Total retained earnings before the stock dividend is declared$33,500,000No treasury share have been reissued.Stock DividendsThe company declared a 2% common stock dividend on December 1, and would like you to compute the following pieces of missing information. The market value of the common shares is $24 on December 1, and is...
Dehesa, Inc. has 8,000 shares of 5%, $15 par, cumulative preferred stock and 50,000 shares of $3 par common stock outstanding. No dividends were declared last year. However, the board of directors just declared a $34,000 dividend this year. What amount of the total dividend will be paid to common stockholders? $34,000 $22,000 $28,000 $12,000