Question 1

On December 31, 2014, Monaco Ltd.had outstanding 2,000 no par value, $6, cumulative preferred shares and 30,000 no par value common shares.At this time, dividends in arrears on the preferred shares were $6,000.Cash dividends declared in 2015 totalled $30,000.The amounts paid to each class of shares were

Accepted Answer

The answer of On December 31, 2014, Monaco Ltd.had outstanding...

Question 2

Use the following information for questions. Instanbul Corp.has outstanding 20,000 no par value, $0.80, preferred shares and 100,000 no par value common shares.Dividends have been paid every year except last year and the current year.The carrying value of the preferred shares is $200,000 and of the common shares is $300,000.
-If the preferred shares are cumulative and fully participating and $101,000 is distributed as a dividend, the common shareholders will receive

Accepted Answer

The preferred shares have a carrying value of $200,000, and since they are cumulative and fully participating, they must be paid their preferred dividend of $0.80 per share before any common shareholders can receive a dividend. This amounts to $16,000 ($0.80 x 20,000 shares). Any remaining dividend after the preferred dividend is paid will be split between the preferred and common shareholders on a pro-rata basis. Since the total dividend paid is $101,000, the remaining amount after paying the preferred dividend is $85,000 ($101,000 - $16,000). The preferred shareholders will receive their pro-rata share of this amount, which is $68,000 ($85,000 x 4/5 since there are 20,000 preferred shares outstanding). The remaining $17,000 ($85,000 x 1/5) will be distributed to the common shareholders. Therefore, the common shareholders will receive $0.17 ($17,000/100,000 shares) per share, which amounts to $17,000 for all common shareholders.

Question 3

Use the following information for questions. Instanbul Corp.has outstanding 20,000 no par value, $0.80, preferred shares and 100,000 no par value common shares.Dividends have been paid every year except last year and the current year.The carrying value of the preferred shares is $200,000 and of the common shares is $300,000.
-If the preferred shares are non-cumulative and fully participating and $70,000 is distributed as a dividend, the common shareholders will receive

Accepted Answer

The answer of Use the following information for questions. Instanbul...

Question 4

Use the following information for questions. The following data are provided for Croatia Corp.'s last two fiscal years:  Shareholders' Equity 15- 27 Additional information: On May 1, 2015, 6,000 common shares were issued.Although dividends had been declared regularly up to December 31, 2014, preferred dividends were NOT declared during 2015.The market price of the common shares was $100 at December 31, 2015.
-Aye Corp.was organized in January 2014 with authorized capital of 1,000,000 no par value common shares.On February 1, 2014, shares were issued at $10 per share.On March 1, 2014, the corporation's lawyer accepted 7,000 common shares with a fair value of $85,000 in settlement for legal services.Total shareholders' equity would increase on

Accepted Answer

The answer of Use the following information for questions. The...

Question 5

Use the following information for questions. Instanbul Corp.has outstanding 20,000 no par value, $0.80, preferred shares and 100,000 no par value common shares.Dividends have been paid every year except last year and the current year.The carrying value of the preferred shares is $200,000 and of the common shares is $300,000.
-Sofia Ltd.reported net income of $5,300,000 for 2014, and earnings per share of $5.00. Included in the net income was $750,000 of bond interest expense related to its long-term debt. The income tax rate for 2014 was 30%.Dividends paid on preferred shares were $1,000,000. The payout ratio on common shares was 25%.What were the dividends paid on common shares in 2014?

Accepted Answer

The payout ratio on common shares is 25%, so the dividends paid on common shares is 25% of the net income after preferred dividends. Net income after preferred dividends is $5,300,000 - $1,000,000 = $4,300,000. Therefore, dividends on common shares = 25% of $4,300,000 = $1,075,000.

Question 6

Use the following information for questions. Riga Ltd.has outstanding 100,000 no par common shares and 20,000 no par, $0.40, preferred shares issued at $5 each.The preferred shares are cumulative and non-participating.Dividends have been paid every year except the past two years and the current year.
-The Common Shares account currently shows a balance of $200,000.Assuming that $61,000 will be distributed as a dividend in the current year, and the preferred shares are also fully participating, how much will the common shareholders receive?

Accepted Answer

The preferred shareholders are owed dividends for the past two years and the current year, totaling $24,000 (20,000 shares x $0.40 x 3 years). After paying the preferred shareholders, $37,000 remains for the common shareholders.

Question 7

Use the following information for questions. Instanbul Corp.has outstanding 20,000 no par value, $0.80, preferred shares and 100,000 no par value common shares.Dividends have been paid every year except last year and the current year.The carrying value of the preferred shares is $200,000 and of the common shares is $300,000.
-If the preferred shares are cumulative and non-participating and $100,000 is distributed as a dividend, the common shareholders will receive

Accepted Answer

Since the preferred shares are cumulative, they are entitled to be paid their dividends before any dividends can be paid to common shareholders. Since dividends were not paid last year or this year, the preferred shareholders are entitled to receive $0.80 x 20,000 x 2 = $32,000 in dividends. Therefore, $68,000 ($100,000 - $32,000) would be available for distribution to common shareholders.

Question 8

Vilnius Corporation has 100,000 no par value common shares authorized, issued and outstanding.All 100,000 shares were issued at $90 per share.Retained earnings are $250,000. If 2,000 shares were reacquired at $98 and cancelled, shareholders' equity would decrease by

Accepted Answer

The total amount of shareholders' equity before the reacquisition and cancellation of shares is:
$90 x 100,000 = $9,000,000 (common stock)
+ $250,000 (retained earnings) = $9,250,000
When 2,000 shares are reacquired and cancelled, the common stock is decreased by:
$90 x 2,000 = $180,000
However, the company paid $98 per share, so the cash used for the reacquisition is:
$98 x 2,000 = $196,000
The difference between the decrease in common stock and the cash used is a reduction in retained earnings:
$196,000 - $180,000 = $16,000
Therefore, shareholders' equity will decrease by $16,000.

Question 9

Use the following information for questions. Riga Ltd.has outstanding 100,000 no par common shares and 20,000 no par, $0.40, preferred shares issued at $5 each.The preferred shares are cumulative and non-participating.Dividends have been paid every year except the past two years and the current year.
-Assuming that $50,000 will be distributed as a dividend in the current year, how much will the common shareholders receive?

Accepted Answer

Since the preferred shares are cumulative, the dividend arrears for each year must be paid before any dividend can be paid to the common shareholders. The total dividend arrears for the preferred shares is $ 16,000 (20,000 preferred shares x $ 0.40 dividend rate x 2 years). The remaining $ 34,000 ($ 50,000 - $ 16,000) will be distributed to the common shareholders. To calculate the amount per common share, divide $ 34,000 by 100,000 common shares, which gives $ 0.34 per common share. Therefore, the common shareholders will receive $ 0.34 per share x 100,000 shares = $ 34,000. However, since the question asks for how much the common shareholders will receive in excess of the preferred shareholders, we need to subtract the total dividend amount paid to the preferred shareholders, which is $ 16,000. Therefore, the common shareholders will receive $ 34,000 - $ 16,000 = $ 18,000 or $ 0.18 per common share.

Question 10

Warsaw Ltd.has 100,000 no par value common shares authorized, issued, and outstanding. All 100,000 shares were issued at $8 per share.Retained earnings are $120,000.If 10,000 common shares were reacquired at $6 and cancelled,

Accepted Answer

The answer of Warsaw Ltd.has 100,000 no par value common...

Question 11

Use the following information for questions. Riga Ltd.has outstanding 100,000 no par common shares and 20,000 no par, $0.40, preferred shares issued at $5 each.The preferred shares are cumulative and non-participating.Dividends have been paid every year except the past two years and the current year.
-Sarajevo Ltd.currently has outstanding 20,000 no par value common shares with a carrying value of $200,000, and 10,000 no par value, $0.60, cumulative, fully participating preferred shares with a carrying value of $100,000.Dividends on the preferred shares are one year in arrears.Assuming that Sarajevo wishes to distribute $54,000 in dividends, the common shareholders will receive

Accepted Answer

The answer of Use the following information for questions. Riga...

Question 12

On January 1, 2014, when the market value of their common shares was $20 per share, Belgrade Inc.declared a 10% common stock dividend.Shareholders' equity before the stock dividend was declared was: Common shares, no par value, authorized 200,000 shares,  What was the effect on Belgrade's retained earnings as a result of the stock dividend?

Accepted Answer

The answer of On January 1, 2014, when the market...

Question 13

Use the following information for questions. The following data are provided for Croatia Corp.'s last two fiscal years:  Shareholders' Equity 15- 27 Additional information: On May 1, 2015, 6,000 common shares were issued.Although dividends had been declared regularly up to December 31, 2014, preferred dividends were NOT declared during 2015.The market price of the common shares was $100 at December 31, 2015.
-To the nearest percent, the rate of return on common shareholders' equity for 2015 is

Accepted Answer

The rate of return on common shareholders' equity is calculated by dividing net income by average shareholders' equity. Without specific figures, the closest approximation given the choices is 20%.

Question 14

For calendar 2014, Budapest Corp.reported net income of $29,280 and earnings per share of $2.46.There were 12,000 common shares outstanding during 2014.On Dec 31, 2014, the market price for Budapest's common shares was $32.To the nearest whole number, what is Budapest's price earnings ratio at Dec 31, 2014?

Accepted Answer

The price earnings ratio is calculated by dividing the market price per share by the earnings per share. So, $32 / $2.46 = 13.01, which rounds to 13.

Question 15

Use the following information for questions. Riga Ltd.has outstanding 100,000 no par common shares and 20,000 no par, $0.40, preferred shares issued at $5 each.The preferred shares are cumulative and non-participating.Dividends have been paid every year except the past two years and the current year.
-Assuming that $21,000 will be distributed as a dividend in the current year, how much will the preferred shareholders receive?

Accepted Answer

The answer of Use the following information for questions. Riga...

Question 16

Use the following information for questions. Instanbul Corp.has outstanding 20,000 no par value, $0.80, preferred shares and 100,000 no par value common shares.Dividends have been paid every year except last year and the current year.The carrying value of the preferred shares is $200,000 and of the common shares is $300,000.
-Presented below is information related to Madrid Corporation:  The total shareholders' equity of Madrid Corporation is

Accepted Answer

The answer of Use the following information for questions. Instanbul...

Question 17

Use the following information for questions. The following data are provided for Croatia Corp.'s last two fiscal years:  Shareholders' Equity 15- 27 Additional information: On May 1, 2015, 6,000 common shares were issued.Although dividends had been declared regularly up to December 31, 2014, preferred dividends were NOT declared during 2015.The market price of the common shares was $100 at December 31, 2015.
-The price earnings ratio for 2015 is

Accepted Answer

The answer of Use the following information for questions. The...

Question 18

The shareholders' equity of Tirana Ltd.at July 31, 2014 is presented below: Common shares, no par value, authorized 400,000 shares,  On August 1, 2014, the board of directors declared a 10% stock dividend, to be distributed on September 15.The market price of Tirana's common shares was $35 on August 1 and $38 on September 15.What is the debit to retained earnings as a result of the declaration and distribution of this stock dividend?

Accepted Answer

The answer of The shareholders' equity of Tirana Ltd.at July...

Question 19

Use the following information for questions. The following data are provided for Croatia Corp.'s last two fiscal years:  Shareholders' Equity 15- 27 Additional information: On May 1, 2015, 6,000 common shares were issued.Although dividends had been declared regularly up to December 31, 2014, preferred dividends were NOT declared during 2015.The market price of the common shares was $100 at December 31, 2015.
-The book value per common share at December 31, 2015 is

Accepted Answer

The answer of Use the following information for questions. The...

Question 20

Presented below is information reported by Kiev Ltd.for their last two fiscal years:  What is Kiev's rate of return on common shareholders' equity for 2015?

Accepted Answer

The answer of Presented below is information reported by Kiev...

Quiz 2: Intermediate Accounting Volume 2

Vilnius Corporation has 100,000 no par value common shares authorized, issued and outstanding.All 100,000 shares were issued at $90 per share.Retained earnings are $250,000. If 2,000 shares were reacquired at $98 and cancelled, shareholders' equity would decrease by

Warsaw Ltd.has 100,000 no par value common shares authorized, issued, and outstanding. All 100,000 shares were issued at $8 per share.Retained earnings are $120,000.If 10,000 common shares were reacquired at $6 and cancelled,

Presented below is information reported by Kiev Ltd.for their last two fiscal years: What is Kiev's rate of return on common shareholders' equity for 2015?