Question

The pulty sections for Atticus Group at the beginning of the year derary 1) and end of the year 000 Apr. 5 Declared as per share cash dividendo con il July 5 Declared a soso per la cash dividende ofrecedy 10 July 31 Declared a 20 vided when the dark how 512 per Aug 14 Incheck dividend that was declared on July 31 Out 5 Declared a 50 50 pershaw havien de record October 10 Explanation and steps please 768.000 130.000 Required 1. How many common se standing on each cash dividende 2. What is the total dollar amount for each of the four cash dividends? 3. What is the amount of retained earnings transferred to paid-in capital accounts leapitalized) for the stock dividend 4. What is the per share cost of the treasury Mack purchased 5. How much net income did the company cars this year?

Answer 1

Please refer the following image for the solution:

Answer 2 Calculation of Cash Dividend Dividend is the distribution of profits to the shareholders. There are two types of Dividend: Cash Dividend and Stock dividend. In cash dividend cash is paid to shareholders and in stock dividend additional shares are issued to the shareholders without any consideration. Both the dividends are paid from retained earnings which has accumulated profits. Cash Dividend = No. of shares outstanding * Cash dividend per share Answer 1 Calculation of Number of shares outstanding No. of shares outstanding Current shares outstanding + New shares issued - new stock repurchased Date No. of shares outstanding Dividend per share Cash Dividend Jan-05 40000 $ 0.50 $ 20,000 Apr-05 37000 $ 0.50 $ 18,500 Jul-05 37000 $ 0.50 $ 18,500 Oct-05 44400 $ 0.50 $ 22,200 First cash dividend was declared on Jan 5 and recorded on Jan 10 Between this period neither new shares were are issued nor new stock repurchased, so no. of outsanding shares will be same as on Jan 1 i.e. 40000 shares No. of shares outstanding on Jan 5 - 40000 Answer 3 Calculation of amount to be capitalized in retained earnings for stock dividend On March 20 Treasury stock were repurchased, so shares outstanding will be, No. of shares outstanding on Apr 5 = 40000 - 3000 37000 shares Value of Stock Dividend = No. of shares issued * Market Price per share 37000 + 20% * $12 $88,800 No. of shares outstanding on Apr 5 - 37000 Answer 4 Calculation of per share cost of treasury stock purchased No. of shares issued on July 5 would be same as on Apr 5 as neither new shares were are issued nor new stock repurchased No. of shares outstanding on July 5 - 37000 Per Share cost of Treasury stock = Total cost of Treasury stock / No. of treasury shares $30,000 / 3000 $10 per share On July 31 there was 20% stock dividend was declared so, no. of outstanding shares will increase by stock dividend No. of shares outstanding on Octr 5 = 37000 +(37000 *20%) 44400 shares No. of shares outstanding on Oct 5 - 44400 Answer 5 Calculation of net Income Net Income = Closing retained earnings + Dividend - Opening retained earnings Retained earnings Dec 31 Add : Cash Dividend Add : Stock Dividend Less : Retained earnings Jan 1 Net Income $ $ $ $ $ 400,000 79,200 88,800 320,000 248,000