Liquidation Value ($) 2,000,000 4,000,000 10,000,000 50,000,000 Payoff to Series A Preferred Payoff to Common Stock
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An investor received a term sheet from a venture capitalist, the key terms of which are summarized in the following table: Amount and Securities: 4,000,000 shares of Series A
- Calculate the payoff at maturity to Series A Preferred Stock as well as Common Stock as a function of liquidation value. Complete the table below that summarizes the allocation of the liquidation value between preferred stock and common stock:
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- Raun Company had the following equity items as of December 31, 2019: Preferred stock, 9% cumulative, 100 par, convertible Paid-in capital in excess of par value on preferred stock Common stock, 1 stated value Paid-in capital in excess of stated value on common stock| Retained earnings The following additional information about Raun was available for the year ended December 31, 2019: 1. There were 2 million shares of preferred stock authorized, of which 1 million were outstanding. All 1 million shares outstanding were issued on January 2, 2016, for 120 a share. The preferred stock is convertible into common stock on a 1-for-1 basis until December 31, 2025; thereafter, the preferred stock ceases to be convertible and is callable at par value by the company. No preferred stock has been converted into common stock, and there were no dividends in arrears at December 31, 2019. 2. The common stock has been issued at amounts above stated value per share since incorporation in 2002. Of the 5 million shares authorized, 3,580,000 were outstanding at January 1, 2019. The market price of the outstanding common stock has increased slowly but consistently for the last 5 years. 3. Raun has an employee share option plan where certain key employees and officers may purchase shares of common stock at 100% of the marker price at the date of the option grant. All options are exercisable in installments of one-third each year, commencing 1 year after the date of the grant, and expire if not exercised within 4 years of the grant date. On January 1, 2019, options for 70,000 shares were outstanding at prices ranging from 47 to 83 a share. Options for 20,000 shares were exercised at 47 to 79 a share during 2019. During 2019, no options expired and additional options for 15,000 shares were granted at 86 a share. The 65,000 options outstanding at December 31, 2019, were exercisable at 54 to 86 a share; of these, 30,000 were exercisable at that date at prices ranging from 54 to 79 a share. 4. Raun also has an employee share purchase plan whereby the company pays one-half and the employee pays one-half of the market price of the stock at the date of the subscription. During 2019, employees subscribed to 60,000 shares at an average price of 87 a share. All 60,000 shares were paid for and issued late in September 2019. 5. On December 31, 2019, there was a total of 355,000 shares of common stock set aside for the granting of future share options and for future purchases under the employee share purchase plan. The only changes in the shareholders equity for 2019 were those described previously, the 2019 net income, and the cash dividends paid. Required: Prepare the shareholders equity section of Rauns balance sheet at December 31, 2019. Substitute, where appropriate, Xs for unknown dollar amounts. Use good form and provide full disclosure. Write appropriate notes as they should appear in the publisher financial statements.Alpha company reported the following equity accounts on January 1, 2020. Share capital, P20 par, P8,000,000; Share premium, P2,750,000; Retained earnings, P1,275,000. All shares outstanding on January 1 were issued for P26 a share. On December 31, the entity reacquired 20,000 shares at P24 a share and retired them. What is the balance of the share premium?Alpha company reported the following equity accounts on January 1, 2020. Tpoint hare capital, P20 par, P8,000,000; Share premium, P2,750,000; Retained earnings. P1,275,000. All shares outstanding on January 1 were issued for P26 a share. On December 31. the entity reacquired 20,000 shares at P24 a share and retired them. What is the balance of the share premium?
- The Shareholders’ Equity of Purple Corporation showed the following: Ordinary Share capital, P 10 par, 900,000 shares issued P9,000,000; Ordinary Share Premium P2,700,000; Retained Earnings P1,300,000. On January 2, 2019, the corporation purchased and retired 100,000 shares of its share capital for P 1,800,000. a. In preparing the journal entry for this transaction, is there an indicated gain or indicated loss? b. how much is the indicated gain (loss)? If your answer is an indicated loss, put a parenthesis. c. how much will be credited to Cash? d. how much will be debited to Ordinary Share Premium??The Shareholders’ Equity of Purple Corporation showed the following: Ordinary Share capital, P 10 par, 900,000 shares issued P9,000,000; Ordinary Share Premium P2,700,000; Retained Earnings P1,300,000. On January 2, 2019, the corporation purchased and retired 100,000 shares of its share capital for P 1,800,000. In preparing the journal entry for this transaction, is there an indicated gain or indicated loss?Using the data, how much is the indicated gain (loss)? If your answer is an indicated loss, put a parenthesis. Using the data, how much will be credited to Cash? Using the data, how much will be debited to Ordinary Share Premium??CanaCo showed the following cquity on its December 31, 2020, balance sheet: Contributed capital Preferred shares, $2 non-cumulative Authorized: 50,000 Issued and outstanding: 0. Common shares Authorized: Unlimited Issued and outstanding: 50.000. Total contributed capital. 6,300,000 $ 6,800,000 3,800,000 Retained earnings. SI0.600.000 Total equity. The shareholders of CanaCo expressed concerns to the board of directors at the recent annual mecting that the market price of their shares has not changed significantly over the past 18 months, yet the company is very profitable. Profit for each of the past three years has been S1.800,000, S2,300,000, and $3,500.000, respectively. Cash dividends were paid in each of these years equal to 50% of profit. Required Using the elements of critical thinking deseribed on the inside front cover, comment. Consider the following subheadings to organize your response, and try to really think about the complexity of share prices. What really will affect…
- Blossom Corporation was organized on January 1, 2026 with the authorization of 1330000 shares of common stock with a par value of $6 per share. In 2026, the corporation had the following capital transactions: January 5 issued 665000 shares @ $10 per share July 28 purchased 79000 shares @ $12 per share December 31 sold the 79000 shares held in treasury @ $20 per share Blossom used the cost method to record the purchase and the reissuance of the treasury shares. What is the total amount of additional paid-in capital as of December 31, 2026? $3292000. $-0- $2041000. $2660000.The following accounts are found in the trial balance of Dawn Corporation as December 31, 2019. Authorized Ordinary share capital, P 100 par P1,000,000; Unissued Ordinary share capital P300,000; Subscribed Ordinary share P200,000; Ordinary share subscription receivable P100,000; Ordinary share premium P70,000. The total number of shares issued is Using data in number 1, the total number of shares still available for subscription is"The following are found in the trial balance of M Corporation at December 31, 2021: Authorized ordinary share, P50 par value P3,000,000; Subscription receivable P200,000; Unissued ordinary share P1,000,000; Subscribed ordinary share P500,000; Share premium ordinary P100,000. What is the total number of shares available for subscription?"
- The following shareholders’ equity accounts are included in the statement of financial position of Kiwi Co. on December 31, 2020. • Preference share capital, 8%, P100 par (200,000 shares authorized, 60,000 shares issued and outstanding)- P6,000,000 • Ordinary share capital, P5 par (2,000,000 shares authorized, 600,000 shares issued and outstanding) -P3,000,000 • Share premium- P3,750,000 • Retained earnings- P3,500,000 In 2021, Kiwi took part in the following transactions concerning equity. 1. Paid the annual 2020 P8 per share dividend on preference shares and a P2 per share dividend on ordinary shares. These dividends had been declared on December 31, 2020. 2. Purchased 81,000 shares of its own outstanding ordinary shares for P40 per share. 3. Reissued 21,000 treasury shares for land valued at P900,000. 4. Issued 15,000 preference shares at P105 per share. 5. Declared a 10% stock dividend on the outstanding ordinary shares when the shares are selling for P45 per share. 6. Issued the…Ared Company showed the following shareholders’ equity on January 1, 2020: Share capital 1,000,000 Share premium 2,000,000 Retained earnings 4,000,000 The entity had 400,000 authorized shares of P5 par value, of which 200,000 shares were issued and outstanding. On July 1, 2020, the entity declared a property dividend of inventory payable on March 1, 2021. The inventory had a P1,200,000 carrying amount and a fair value less cost to distribute of P1,000,000 on July 1, 2020. The fair value less cost to distribute is P1,500,000 on December 31, 2020, and P900,000 on March 1, 2021. The net income for 2020 was P3,000,000. - What is the carrying amount of the inventory on December 31, 2020? - What is the amount to be recognized in profit or loss for the distribution of the non- cash dividend?Ared Company showed the following shareholders’ equity on January 1, 2020: Share capital 1,000,000 Share premium 2,000,000 Retained earnings 4,000,000 The entity had 400,000 authorized shares of P5 par value, of which 200,000 shares were issued and outstanding. On July 1, 2020, the entity declared a property dividend of inventory payable on March 1, 2021. The inventory had a P1,200,000 carrying amount and a fair value less cost to distribute of P1,000,000 on July 1, 2020. The fair value less cost to distribute is P1,500,000 on December 31, 2020, and P900,000 on March 1, 2021. The net income for 2020 was P3,000,000. - What amount should be reported as retained earnings on December 31, 2020? - What is the dividend payable on December 31, 2020?