Salazar Group,s 2005 and 2006 year- end balance sheet follow.

Salazar Group,s 2005 and 2006 year- end balance sheet follow.
1.How many common shares are outstanding on each cash dividend date?
2. What is the total dollar amount for each of the four cash dividends?
3. What is the amount of the capitalization of retained earnings for the stock dividend?
4. What is the per share cost of the treasury stock purchased?
5. How much net income did the company earn during year 2012

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P13-8A Razz Corporation’s common stock is currently selling on a stock exchange at $170 per share, and its current balance sheet shows the following stockholders’ equity section

Problem 13-8A Razz Corporation’s common stock is currently selling on a stock exchange at $170 per share, and its current balance sheet shows the following stockholders’ equity section

ANSWER KEY Problem 13-8A Computation of book values and dividend allocations C3 A2 P2

13. Accounting for Corporations

Larson−Wild−Chiappetta: Fundamental Accounting Principles, Seventeenth Edition 

Problem 13-8A Razz Corporation’s common stock is currently selling on a stock exchange at $170 per share, and its current balance sheet shows the following stockholders’ equity section

Preferred stock—5% cumulative, $___ par value, 1,000 shares

authorized, issued, and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     $100,000

Common stock—$___ par value, 4,000 shares authorized, issued,

and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       160,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  300,000

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 $560,000

Required

1. What is the current market value (price) of this corporation’s common stock?

2. What are the par values of the corporation’s preferred stock and its common stock?

3. If no dividends are in arrears, what are the book values per share of the preferred stock and the common stock?

4. If two years’ preferred dividends are in arrears, what are the book values per share of the preferred stock and the common stock?

5. If two years’ preferred dividends are in arrears and the preferred stock is callable at $110 per share, what are the book values per share of the preferred stock and the common stock?

6. If two years’ preferred dividends are in arrears and the board of directors declares cash dividends of $20,000, what total amount will be paid to the preferred and to the common shareholders? What is the amount of dividends per share for the common stock?

Analysis Component

7. What are some factors that can contribute to a difference between the book value of common stock and its market value (price)?

Check (4) Book value of common, $112.50

(5) Book value of common, $110

(6) Dividends per common share, $1.25

SOLUTION PREVIEW

Problem 13-8A  

1.         Market price = $170 per share (current stock exchange price given)

2.         Computation of stock par values

            Preferred: Paid-in amount / Number of shares = $100,000 / 1,000 = $100

            Common: Paid-in amount / Number of shares = $160,000 / 4,000 = $40  

3.         Book values with no dividends in arrears

            Book value per preferred share           = par value (when not callable) = $100

Common stock
Total equity	$ 560,000

 

File name: P13-8A-Razz-Corporations.doc File type: application/msword Price: $6

P 18-1A The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011

P18-1A The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011

Problems 18-1AVince Drum Company

Financial & Managerial Accounting, Information for Decisions, 4^th ed., John J. Wild, Ken W. Shaw and Barbara Chiappetta

The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011. The drum sets sell for $250 each. The company has a 25% income tax rate.

Variable production costs

            Plastic for casing……………………………………..$68,000

            Wages of assembly workers………………………….328,000

            Drum stands………………………………………….104,000

Variable sellings costs

            Sales commissions…………………………………….60,000

Fixed manufacturing costs

            Taxes on factory………………………………………10,000

            Factory maintenance…………………………………..20,000

Factory machinery depreciation                                  .  80,000. 

Fixed selling administrative costs 

            Lease of equipment for sales staff……………………  20,000

Accounting staff salaries……………………………….70,000

Administrative management salaries………………….150,000

                                                                                               

Required

1.   Prepare a contribution margin income statement for the company

2.   Compute its contribution margin and contribution margin ratio.

3.   Interpret the contribution margin ratio from part 2.

File name: P-18-1A-Vince-Drum-Company.doc File type: application/msword Price: $5

16-1A 16-3A Kazaam Company, a merchandiser, recently completed its calendar-year 2005 operations. For the year,

Problem 16-1A 16-3A Kazaam Company, a merchandiser, recently completed its calendar-year 2005 operations. For the year,
(1) all sales are credit sales,

(2) all credits to Accounts Receivable reflect cash receipts from customers,
(3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash
payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. KazaamÂ’s balance sheets and income statement follow:

KAZAAM COMPANY                                                                                           SOLUTION
Comparative Balance Sheets
December 31, 2005
2005 2004
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 53,875 $ 76,625
Accounts receivable . . . . . . . . . . . . . . . . . 65,000 49,625
Merchandise inventory . . . . . . . . . . . . . . . 273,750 252,500
Prepaid expenses . . . . . . . . . . . . . . . . . . . 5,375 6,250
Equipment . . . . . . . . . . . . . . . . . . . . . . . . 159,500 110,000
Accum. depreciation—Equipment . . . . . . . . (34,625) (44,000)
Total assets . . . . . . . . . . . . . . . . . . . . . . . $522,875 $451,000
Liabilities and Equity
Accounts payable . . . . . . . . . . . . . . . . . . . $ 88,125 $116,625
Short-term notes payable . . . . . . . . . . . . . 10,000 6,250
Long-term notes payable . . . . . . . . . . . . . 93,750 53,750
Common stock, $5 par value . . . . . . . . . . 168,750 156,250
Contributed capital in excess
of par, common stock . . . . . . . . . . . . . . 32,500 0
Retained earnings . . . . . . . . . . . . . . . . . . . 129,750 118,125
Total liabilities and equity . . . . . . . . . . . . . $522,875 $451,000

KAZAAM COMPANY
Income Statement
For Year Ended December 31, 2005
Sales . . . . . . . . . . . . . . . . . . . . . . . . . $496,250
Cost of goods sold . . . . . . . . . . . . . . 250,000
Gross profit . . . . . . . . . . . . . . . . . . . . 246,250
Operating expenses
Depreciation expense . . . . . . . . . . . $ 18,750
Other expenses . . . . . . . . . . . . . . . 136,500 155,250
Other gains (losses)
Loss on sale of equipment . . . . . . . 5,125
Income before taxes . . . . . . . . . . . . . . $ 85,875
Income taxes expense . . . . . . . . . . . . 12,125
Net income . . . . . . . . . . . . . . . . . . . . $ 73,750

Additional Information on Year 2005 Transactions
a. The loss on the cash sale of equipment is $5,125 (details in b).
b. Sold equipment costing $46,875, with accumulated depreciation of $28,125, for $13,625 cash.
c. Purchased equipment costing $96,375 by paying $25,000 cash and signing a long-term note payable
for the balance.
d. Borrowed $3,750 cash by signing a short-term note payable.
e. Paid $31,375 cash to reduce the long-term notes payable.
f. Issued 2,500 shares of common stock for $18 cash per share.
g. Declared and paid cash dividends of $62,125.

Required
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method.
Disclose any noncash investing and financing activities in a note.
2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment.

Refer to the information reported about Kazaam Company in Problem 16-1A.
Required

Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report its operating activities using the indirect method. Identify the debits and credits in the Analysis of  hanges
columns with letters that correspond to the following list of transactions and events:

a. Net income is $73,750.
b. Accounts receivable increased.
c. Merchandise inventory increased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense is $18,750.
g. Sold equipment costing $46,875, with accumulated depreciation of $28,125, for $13,625 cash. This yielded a loss of $5,125.
h. Purchased equipment costing $96,375 by paying $25,000 cash and (i.) by signing a long-term note payable for the balance.
j. Borrowed $3,750 cash by signing a short-term note payable.
k. Paid $31,375 cash to reduce the long-term notes payable.
l. Issued 2,500 shares of common stock for $18 cash per share.
m. Declared and paid cash dividends of $62,125.

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