Question

The stockholders' equity accounts of Swifty Corporation on January 1,2017, were as follows. Preferred Stock (896, $100 par noncumulative, 5,000 shares authorized) Common Stock ($4 stated value, 300,000 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 (5,000 common shares) $300,000 1,000,000 15,000 480,000 689,000 40,000 During 2017, the corporation had the following transactions and events pertaining to its stockholders' equity. Issued 5,000 shares of common stock for $35,000 Purchased 1,000 additional shares of common treasury stock at $7 per share. Declared a 8% cash dividend on preferred stock, payable November 1. Paid the dividend declared on October 1. Declared a $0.85 per share cash dividend to common stockholders of record on December 15, payable December 31,2017 Paid the dividend declared on December 1. Feb. 1 Mar. 20 Oct. 1 Nov. 1 Dec. 1 Dec. 31 Your answer is incorrect. (a) Prepare a tabular summary that includes the January 1, 2017, balances. Do not include the beginning balance in Retained Earni (b) Record the 2017 transactions in the tabular summarv Round answers to O decimal places, eg. 5,275. If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negativ sign (or parentheses) in front of the amount entered for the particular Asset,Liability or Equity item that was reduced.) Assets Liabilities PIC in Exces Div. Pay Common Stock Cash (a) Bal $ 1000000 $ (b) Feb. 1 35000 Mar. 20 Oct. 1 Nov. 1

Also a

Prepare the stockholders’ equity section of the balance sheet at December 31, 2017. Include 2017 net income of $364,100 as an increase to the January 1, 2017, Retained Earnings.

and

Calculate the payout ratio, earnings per share, and return on common stockholders’ equity. (Note: Use the common shares outstanding on January 1 and December 31 to determine the average shares outstanding.) (Round earning per share to 2 decimal places, e.g. $2.66 and all other answers to 1 decimal place. 17.5%.)

Answer 1

Tabular Summary No of shares 3,000 250,000 Amount Preferred Stock Common Stock Excess paid in capital- preferred stock Excess paid in capital- common stock Treasury Stock 300,000 1,000,000 15,000 480,000 (40,000) (5,000) 1,755,000

Statement of Stockholder's Equity Additional Paid-in Retained Common Shares Preferred ital Earnings Total Amount Shares Amount 960,000 20,000 (4,000) Balance as on January 01,2017 Net income Common stock issued Stock dividends declared Treasury stock Balance as on December 31,2017 245,000 5,000 (1,000) 3,000 300,000 495,000 15,000 (3,000) 689,000 2,444,000 364,100 35,000 (235,650) (235,650) (7,000) 817,450 2,600,450 364,100 249,000 976,000 3,000 300,000 507,000

1-Feb 5000 shares issuedor S35,000 Value in Common Stock (5,000*4) Value in Additional Paid in Capital (bal fig.) 20,000 15,000 35,000 20-Mar Purchased 1000 shares at S7pershare Value of common stock to be reduced (1,000*4) Value in Additional Paid in Capital to be reduced 4,000 3,000 7,000 1-Oct Declaration of 896 cash dividend to preference shareholders 24,000.00 Dividend amount (300,000*8%) 1-Dec Declaration ofcash dividend common stockholders No of shares outstanding Opening Treasury stock Additiona issued Additional Treasury stock bought back No of shares outstanding 250,000 (5,000) 5,000 1,000 249,000 Dividend per share 0.85 Dividend amount 211,650

Calculation of payout ratio, earnings per share and return on SE Earning per share Average number of shares outstanding 247,000 ening Share+ Closing Shares 245,000 249,000 Where opening shares Closing shares Total earnings for equity shareholders Earnings per share (b/a) 340,100 (364,100-24,000) 1.38 Payout Ratio Dividend per share Earnings per share Payout ratio 0.85 1.38 62% Return on stockholder's equity Income earned for stockholders during theyear Opening stockholder's equity Return on SE 364,100 2,444,000 15%