【正文】 quity – Liquidating value of preferred stock) Number of mon shares outstanding= ($20,000 – $4,400) 247。Changes if they sell their dividend shares, their proportionate ownership interests in the pany will decrease.Second, the pany records the transaction by transferring the market value of the additional shares from retained earnings to mon stock and “paidin capital in excess of par.” This entry is often referred to as the “capitalization of retained earnings.”4. Investment in mon stock of Minneapolis Co. 125,000 Cash 125,000 To record investment in 5,000 shares of an original issue of Minneapolis39。DividendDividend $.50 = 22Dividendpayout ratio = Common dividends per share 247。 189。 and ($ – $25) 1,500 = 20,505。62) 1, = 165。158,611 247。 1, shares = 165。55,0942. In the United States, par value is usually small in relation to the issue price of mon shares. For Kawasaki Heavy Industries, the par value is 165。 respectively. Common stock 15 Paidin capital 37,485 Retained earnings 20,505 Cash 58,0051042 (15 min.) Amounts are in millions except per share amounts and percentage.1. Book value per mon share = (Total stockholders’ equity – Book value of preferred stock) 247。 [($18,400 – $4,400) + ($20,000 – $4,400)] = $2,000 247。 Common earnings per share = $.20 247。 420,000 shares = $.First, note that individual shareholders receive no assets from the corporation. Moreover, their fractional interests are unchanged。 Market price per share of mon stock = $.20 247。 ($14,000 + $15,600) = $2,000 247。 2 = $2. Rate of return on mon equity = (Net ine – Preferred dividends) 247。77 = 165。 165。62 par value shares issued at 165。s capitalization should produce no accounting gain or loss, but should be recorded as direct adjustments to the stockholders’ equity.1020 The proper amount is the “fair value” of either the issued securities or the ining assets, whichever is more objectively determinable. That same amount should be used by both parties to the exchange.1021 A conversion option allows an investor to participate in a pany’s success by converting to mon shares. Meanwhile, the investor can receive the interest on bonds or dividends on preferred stock, and they do not bear the risk of declines in the price of the mon stock. These options are valuable, so they make the bond or preferred stock more valuable to an investor.1022 A voluntary restriction on dividenddeclaring power may take the form of a reserve for contingencies (also called an appropriation of retained earnings for contingencies). The reserve may be used to restrict dividend payments in order to retain cash for a particular purpose such as plant expansion. Completely involuntary are restrictions under state law that prohibit payment of dividends if retained earnings is negative or debt covenants restrict such payments. 1023 Restrictions on dividenddeclaring power protect the rights of creditors. Such restrictions may be a necessary to borrow money. They may also reduce the interest rate lenders would require. Finally, restrictions inform investors about the intentions of the board.1024 ROE provides information about the returns investors in general get from the cumulative investments they have made in the pany. However, most investors do not buy shares directly from the pany。103,517 And (165。 1,500= 58,0052. Common Stock, Paidin Capital, and Retained Earnings will be decreased by $.01 1,500 = 15。 [($112 – $15) + ($118 – $15)] = $ 247。 4,000 = $.50Priceearnings ratio = Market price per share of mon stock 247。 $ 50 Number of shares 4,960,000 2. These automatic plans save brokerage fees and are a convenient way for a pany to raise additional capital. The letter writer misses the point. The shareholder can have cash if desired (unlike stock dividends). Therefore, the amount is justifiably subject to personal ine taxes because the cash is “constructively received.” Different corporations are at different stages in their growth cycles. Investors who do not desire dividends may prefer to invest in growth stocks that do not pay dividends. These investors can meet their periodic needs for cash by selling shares.1048 (10 min.)1. The logical reasons would typically be historical, tax based, or related to access to capital. Sometimes they are linked to voting rights, as with Ford Motor Company where historical family holdings carry super voting rights. That is not the case with Shell. The different classes are an historical result of the 1907 merger of a Dutch pany with a . pany. A historically plex structure was simplified in 2004 but the differential payment currencies continue. The . ADR structure is a longstanding . mechanism for providing access to international panies, but it is not about how panies issue stock. Rather is represents a mechanism for making international panies available to . shareholders via a trust mechanism that holds class A or B shares and issues ADR’s. 2. Shell publishes its financial statements in . dollars because that is the international currency in which oil transactions are priced. 1049 (20–30 min.)1. Cash 10,000,000 Common stock 1,600,000 Additional paidin capital 8,400,000 To record the issuance of 400,000 shares of $4 par value for an average price of $25 per share.2. Retained earnings 400,000 Cash 400,000 To record the declaration and payment of cash dividends of $1 per share on March 31, 20X2.3. Retained earnings 1,000,000 Common stock 80,000 Additional paidin capital 920,000 To record a 5% mon stock dividend, resulting in the issuance of 20,000 shares. Retained earnings is reduced at the rate of the market value of $50 per share at date of issuance. Before 5% After 5% Stock Stock