Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem 3.9P
Learning Goal 1
P3-9 Changes In stockholders’ equity Listed are the equity sections of balance sheets for years 2018 and 2019 as reported by Mountain Air Ski Resorts Inc. The overall value of stockholders’ equity has risen from $2,000,000 to $7,500,000. Use the statements to discover how and why that happened.
Mountain Air Ski Resorts Inc Balance Sheets (partial)
| Stockholders’ equity | 2018 | 2019 |
| Common stock ($1.00 par) | ||
| Authorized: 5,000,000 shares | ||
| Outstanding: 1,500,000 shares 2019 | $1,500,000 | |
| 500.000 shares 2018 | $ 500.000 | |
| Paid-in capital in excess of par | 500,000 | 4,500,000 |
| Retained earnings | 1,000,000 | 1,500,000 |
| Total stockholders’ equity | $2,000,000 | $7,500,000 |
The company paid total dividends of $200,000 during fiscal2019.
- a. What was Mountain Air’s net income for fiscal 2019?
- b. How many new shares did the corporation issue and sell during the year?
- c. At what average price per share did the new stock sold during 2019 sell?
- d. At what price per share did Mountain Air’s original 500,000 shares sell?
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Common stock-$10 par value, 120,000 shares authorized, 50,000 shares issued
and outstanding
Paid-in capital in excess of par value, common stock
Retained earnings
Total stockholders' equity
During 2020, the following transactions affected its stockholders' equity accounts.
January 2 Purchased 5,000 shares of its own stock at $23 cash per share.
January 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record.
February 28 Paid the dividend declared on January 5.
July 6 Sold 1,900 of its treasury shares at $27 cash per share.
August 22 Sold 3,100 of its treasury shares at $20 cash per share.
September 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
October 28 Paid the dividend declared on September 5.
December 31 Closed the $206,500 credit balance (from net income) in the Income Summary account to Retained Earnings.
Requirement
General
Journal
General
Ledger
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Statement of Stockholders' Equity
You have been asked to assist with the preparation of a statement of stockholders' equity for Minimus Company for the year ended December 31, 2019. You determine the following balances:
Common Stock at December 31, 2018
Retained Earnings at December 31, 2018
Net Income during 2019
Dividends during 2019
Issuance of Common Stock during 2019
$10,000
7,500
6,000
900
600
Required
Prepare a statement of stockholders' equity for Minimus Company for 2019.
MINIMUS COMPANY
Statement of Stockholders' Equity
For the Year Ended December 31, 2019
CommonStock RetainedEarnings Total Stockholders'Equity
Balance at December 31, 2018
Issuance of Common Stock
Net Income
Dividends Paid(Enter as negative)
Balance at December 31, 2019
NAME:
SCORE:
SECTION:
PROFESSOR:
Problem #16
Shareholders' Equity Section
The shareholders' equity T-accounts of Geron Greeting Cards, Inc. for the year ended
Dec. 31, 2019, are as follows:
Ordinary Shares
Jan. 1 Balance
3,000,000
Mar. 7 Isued
1,350,000
4,350,000
27,000 shares
Dec. 31 Balance
Share Premium-Ordinary
Jan.
1 Balance
480,000
Mar. 7 Isued
27,000 shares
324,000
Dec. 31 Balance
804,000
Treasury Stock
Aug. 7 Purchased
4,500 shares
216,000
Retained Earnings
Mar. 31 Dividends
37,500
Jan. 1 Balance
5,220,000
June 30
Dividends
37,500
Dec. 31 Closing
Sept. 30
Dec. 31 Dividends
Dividends
37,500
(profit)
Dec. 31 Balance
765,000
37,500
5,835,000
Required: Prepare the shareholders' equity section for the year ended Dec. 31, 2019.
Chapter 3 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 3.1 - Prob. 3.1RQCh. 3.1 - Describe the purpose of each of the four major...Ch. 3.1 - Prob. 3.3RQCh. 3.1 - Prob. 3.4RQCh. 3.2 - With regard to financial ratio analysis, how do...Ch. 3.2 - What is the difference between cross-sectional and...Ch. 3.2 - Prob. 3.7RQCh. 3.2 - Prob. 3.8RQCh. 3.3 - Under what circumstances would the current ratio...Ch. 3.3 - In Table 3.5, most of the specific firms listed...
Ch. 3.4 - To assess the firms average collection period and...Ch. 3.5 - What is financial leverage?Ch. 3.5 - What ratio measures the firms degree of...Ch. 3.6 - What three ratios of profitability appear on a...Ch. 3.6 - Prob. 3.15RQCh. 3.6 - Prob. 3.16RQCh. 3.7 - What do the price/earnings (P/E) ratio and the...Ch. 3.8 - Financial ratio analysis is often divided into...Ch. 3.8 - Prob. 3.19RQCh. 3.8 - What three areas of analysis are combined in the...Ch. 3 - For the quarter ended January 28, 2017, Kroger...Ch. 3 - Learning Goals 3, 4, 5 ST3-1 Ratio formulas and...Ch. 3 - Prob. 3.2STPCh. 3 - Prob. 3.1WUECh. 3 - Learning Goal 1 E3-2 Explain why the income...Ch. 3 - Prob. 3.3WUECh. 3 - Learning Goal 3 E3-4 Bluestone Metals Inc. is a...Ch. 3 - Learning Goal 6 E3-5 If we know that a firm has a...Ch. 3 - Financial statement account identification Mark...Ch. 3 - Learning Goal 1 P3-2 1ncome statement preparation...Ch. 3 - Prob. 3.3PCh. 3 - Learning Goal 1 P3-4 Calculation of EPS and...Ch. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Learning Goals 1 P3-7 Initial sale price of common...Ch. 3 - Prob. 3.8PCh. 3 - Learning Goal 1 P3-9 Changes In stockholders...Ch. 3 - Learning Goals 2, 3, 4, 5 P3-10 Ratio comparisons...Ch. 3 - Learning Goal 3 P3-11 Liquidity management Bauman...Ch. 3 - Prob. 3.12PCh. 3 - Inventory management Three companies that compete...Ch. 3 - Accounts receivable management The table below...Ch. 3 - Prob. 3.15PCh. 3 - Learning Goal 4 P3-16 Debt analysis Springfield...Ch. 3 - Prob. 3.17PCh. 3 - Learning Goals 2, 3, 4 P3-18 Using Tables 3.1,...Ch. 3 - Learning Goals 5 P3-19 Common-size statement...Ch. 3 - The relationship between financial leverage and...Ch. 3 - Learning Goal 4 P3-21 Analysis of debt ratios...Ch. 3 - Learning Goal 6 P3-22 Ratio proficiency McDougal...Ch. 3 - Learning Goal 6 P3-23 Cross-sectional ratio...Ch. 3 - Learning Goal 6 P3-24 Financial statement analysis...Ch. 3 - Learning Goals 6 P3- 25 Integrative: Complete...Ch. 3 - Learning Goal 6 P3-26 DuPont system of analysis...Ch. 3 - Learning Goal 6 P3-27 Complete ratio analysis,...Ch. 3 - Spreadsheet Exercise The income statement and...
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