Problem 11-4A

Required: 1. How many common shares are outstanding on each cash dividend date? January 5 20,000 shares April 5 20,000 1,500 Treasury stock = 18,500 shares July 5 18,500 shares October 5- 18,500 + 3,700 stock dividend = 22,200 shares

2. What is the total dollar amount for each of the four cash dividends? January 5 20,000 x $0.50 = $10,000 April 5 18,500 x $0.50= $9,250 July 5 - 18,500 x $0.50= $9,250 October 5 22,200 x $0.50 = $11,100 3. What is the amount of the capitalization of retained earnings for the stock dividend?

Increase in CS Increase in Paid-in capital in excess of par $ 14,800.00 + $ 29,600.00 = $ 44,400.00 4. What is the per share cost of the treasury stock purchased? = 15,000/1500 = $10 per share 5. How much net income did the company earn during year 2012? RE Ending + Cash dividends + Stock dividend - RE beginning = Net income $ 200,000 + $ 39,600 + $ 44,400 - $ 160,000 = $ 124,000

Problem 11-5A 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.

Required (Round per share amounts to cents.)

1. What is the current market value (price) of this corporation's common stock? $170 per share

2. What are the par values of the corporation's preferred stock and its common stock? Par value Preferred = $100,000/1,000 shares = $100 per share Par value Common = $160,000/4,000 shares = $40 per share 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?

7. What are some factors that can contribute to a difference between the book value of common stock and its market value (price)? Book value of common stock and its market value will always differ because the book value is based on amount recorded in the balance sheet while the market value is based on the selling price of the stock in the open market. The market value is affected by many factors such as company performance, current events or news about the company, and economic environment.