【正文】 mon stock at $25 per share. The par value is $4 per share. Cash 5,000Dividend ine 5,000 To record receipt of cash dividends at $1 per share. Stock dividends: No journal entry, but a memorandum 。 420,000 shares = $.First, note that individual shareholders receive no assets from the corporation. Moreover, their fractional interests are unchanged。 4,000 = $Note that the book value is lower than the market value. This is typical. The shareholders are paying for earning power rather than for assets. 1044 (15–25 min.) The dividends payable item is not part of stockholders’ equity.ROSELLI CORPORATIONStatement of Stockholders’ EquityDecember 31, 20X86% cumulative preferred stock, $40 par value, callable at $42, authorized 100,000 shares, issued and outstanding,100,000 shares $4,000,000Common stock, $ par value, authorized million shares, issued million shares of which 60,000 shares are in the treasury 3,000,000Additional paidin capital: Preferred $1,000,000 Common 9,000,000 10,000,000*Retained earnings 12,000,000 Subtotal $29,000,000Deduct: Cost of 60,000 shares of mon stock reacquired and held in treasury (4,000,000)Total stockholders’ equity $25,000,000* Many presentations would not show the detailed breakdown of par value and additional paidin capital for preferred and mon stocks. Preferred stock would be shown as the sum of par and additional paidin capital of $5,000,000. Similarly, mon would be $12,000,000.1045 (10–15 min.) You may wish to use a balance sheet equation to show the overall effects of each item. 1. 0 5. 0 8. – $1,000 2. 0 6. – $50,000 9. + $1,200 3. + $600,000 7. 0 10. + $ 800 4. 01046 (15 min.)1. 20X7 and 20X8 preferred dividends must be paid before any mon dividends can be paid. Dividends are not paid on treasury stock. Preferred dividends = .06 $10 (52,136 – 11,528) 2 = $48,730 Common dividends = $.04 (1,322,850 – 93,091) = $49,190 Retained earnings 48,730 Cash 48,730 To record the declaration and payment of preferred dividends for 20X7 and 20X8. Retained earnings 49,190 Cash 49,190 To record the declaration and payment of mon dividends of $.04 per share.2. Ending balance = Beginning balance + Net ine – Dividends = $2,463,951 + $400,000 – $48,730 – $49,190 = $2,766,031Retained Earnings48,730Balance 2,463,95149,190 400,000Balance2, 766,0311047 (15–20 min.)1. Note that a dividend reinvestment is not the same as a typical stock dividend. Retained earnings 2,480,000,000 Dividends payable 2,480,000,000 Declaration of dividends, $.40 6,200,000,000 shares. Dividends payable 2,480,000,000 Cash 2,232,000,000 Common stock 248,000,000 To record payment of cash (90% of $2,480,000,000) and issuance of 4,960,000 additional shares under automatic dividend reinvestment program. Amount of reinvestment: 10% ($2,480,000,000) $248,000,000 Price per share 247。 Market price per share of mon stock = $.20 247。 Common earnings per share = $.20 247。 Earnings per share of mon stock = $ 247。 Average number of shares outstanding = $2,000 247。 ($14,000 + $15,600) = $2,000 247。 [($18,400 – $4,400) + ($20,000 – $4,400)] = $2,000 247。 100 = %3.Beginning retained earnings+Net ine–Preferred dividends–Common dividends=Ending retained earnings $ + $12 – $ – Common dividends = $69 Common dividends = $7 Using a Taccount, let X = Common dividends Retained EarningsBalance X12Balance69 X = $71043 (10 min.) Dollar amounts (except per share amount) are in thousands.Rate of return on mon equity = (Net ine – Preferred dividends) Average of (Total stockholders’ equity – Liquidating value of preferred stock) = ($2,400 – $400) 247。 189。 2 = $2. Rate of return on mon equity = (Net ine – Preferred dividends) 247。 respectively. Common stock 15 Paidin capital 37,485 Retained earnings 20,505 Cash 58,0051042 (15 min.) Amounts are in millions except per share amounts and percentage.1. Book value per mon share = (Total stockholders’ equity – Book value of preferred stock) 247。 ($ – $.01) 1,500 = 37,485。77 per share.Payment: Dividends payable 139,724 Cash 139,724 To record payment of cash dividends.1037 (10 min.) Cash 80,000 Common stock 8,000 Additional paidin capital 72,000 To record issue of 4,000 shares upon exercise of options to acquire them $20 per share. The managers have options on stock that has a value of 4,000 $40 = $160,000. The gain is $80,000, since they must pay $80,000 to acquire the shares. This substantial economic benefit results from a significant rise in the stock price over 3 years. Proponents of stock options would say that managers had worked hard at the pany and being rewarded appropriately for the benefits the pany had experienced. Critics would ask whether the whole economy and the stock market had doubled during these 3 years and, if so, would argue that managers had benefited from that general improvement.1038 (15 min.) Because the par value of the stock increased by 50%, from $8,802,000 to $13,203,000, Dean Foods had a 3for2 stock split or a 50% stock dividend. The classic idea of a stock split has been to issue a number of shares in exchange for each share of stock now outstanding. Thus a 3for2 split of a $30par stock would mean that a shareholder would receive three $20par shares for each two $30par shares exchanged. This entails no formal change in the total dollar balance of mon stock. As a practical matter, panies often acplish such a split via a 50% “stock dividend.” Dean Foods used the