Question

Question 3 View Policies Show Attempt History Current Attempt in Progress The stockholders' equity accounts of Whispering Winds Corp. on January 1, 2022, were as follows. Preferred Stock (7%, $100 par noncumulative, 6,000 shares authorized) $360,000 Common Stock ($4 stated value, 360,000 shares authorized) 1,200,000 Paid-in Capital in Excess of Par Value-Preferred Stock 18,000 Paid-in Capital in Excess of Stated Value-Common Stock 576,000 Retained Earnings 825,600 Treasury Stock (6,000 common shares) 48,000 During 2022, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. 1 Issued 6,000 shares of common stock for $36,000. Mar. 20 Purchased 1,200 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, 202 Dec. 31 Determined that net income for the year was $335,000. Paid the dividend declared on December 1.

Payout ratio			%
Earnings per share
Return on common stockholders’ equity			\%

Answer 1

Whispering Winds Corp. 360000 Journal Enteries Date Particulars 1.2.2022 Cash a/c Dr. To Common Stock To Paid in Capital in excess of stated value - CS (Common stock issued) 6000 x 4 = 24000 Debit in $ Credit in $ 36000 24000 12000 Preferred Stock Bal 360000 360000 360000 Common Stock Bal 1200000 24000 8400 20.3.2022 Treasury Stock a/c To Cash (Treasury stock purchased) 1200 x 7 8400 Bal Cash 1224000 1224000 1224000 25200 1.10.2022 Cash Dividend a/c Dr. To Dividend Payable - PS (Dividend declared) 360000 x 7% 25200 Paid in Capital in excess of stated value - PS Bal 18000 18000 18000 18000 Dr. 25200 1.11.2022 Dividend Payable - PS a/c To Cash (Dvidend paid) 25200 Paid in Capital in excess of stated value - CS Bal 576000 Cash 12000 588000 588000 588000 1.12.2022 Cash Dividend a/c Dr. 149400 To Dividend Payable - CS 149400 (Dividend declared) 300000 + 6000 - 1200 - 6000 = 298800 x 0.5 = 149400 Dr. 149400 Cash Dividend 31.12.2022 Dividend Payable - CS a/c To Cash (Dvidend paid) Retained Earnings 174600 Bal Income Summary 986000 1160600 825600 335000 149400 Bal 1160600 Dr. 335000 31.12.2022 Income Summary a/c To Retained Earnings (Profits Transferred) 335000 Bal Cash Treasury Stock 48000 8400 Bal 56400 56400 56400 Dr. 174600 31.12.2022 Retained Earnings a/c To Cash Dividends (Cash Dividends account closed) 174600

Partial Balance sheet As at 31.12.2022 Stockholders Equity Preferred Stock (7% $100 par non cumulative, 9000 shares authorized 5400 shares issued and outstanding 360000 Common Stock ($4 stated value,540000 shares authorized, 459000 shares issued and 448200 shares outstanding 1224000 Total Capital Stock 1584000 Paid in Capital in excess of stated value - PS 18000 Paid in Capital in excess of stated value - CS 588000 2190000 Retained Earnings 986000 3176000 Treasury Stock (10200 shares) -56400 3119600 Payout Ratio = Common stock dividend/ (Net Income - preferred dividend) = 149400 / ( 294000 - 25200) = 149400 / 268800 = 55.58% Earning per share = (Net Income - preferred dividend) / No. of outstanding shares = 268800 / (294000 + 298800)/2 = $0.91 Return on Common Stockholders Equity = (Net Income - preferred dividend) / Avg. Common Stockholders Equity 268800 / 1200000 + 576000 + 825600 - 48000 + 1224000 + 588000 +986000-56400)/2 268800 / 2647600 = 10.15%