Business, 07.07.2020 19:01 lillysiege

Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows:

Common stock (2,400,000 shares at $5 par) $12,000,000
Capital in excess of par* 5,000,000
Retained earnings 24,000,000
Net worth $41,000,000

*The increase in capital in excess of par as a result of a stock dividend is equal to the new shares created times (Market price − Par value).

The company’s stock is selling for $20 per share. The company had total earnings of $4,800,000 during the year. With 2,400,000 shares outstanding, earnings per share were $2. The firm has a P/E ratio of 10.

Required:
a. What adjustments would have to be made to the capital accounts for a 10 percent stock dividend?
b. What adjustments would be made to EPS and the stock price?
c. How many shares would an investor end up with if he or she originally had 90 shares?
d. What is the investor's total investment worth before and after the stock dividend if the P/E ratio remains constant?

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 06:00

Suppose that a monopolistically competitive restaurant is currently serving 260 meals per day (the output where mr

Answers: 2

Answer

Business, 22.06.2019 10:30

Trecek corporation incurs research and development costs of $625,000 in 2017, 30 percent of which relate to development activities subsequent to ias 38 criteria having been met that indicate an intangible asset has been created. the newly developed product is brought to market in january 2018 and is expected to generate sales revenue for 10 years. assume that a u.s.–based company is issuing securities to foreign investors who require financial statements prepared in accordance with ifrs. thus, adjustments to convert from u.s. gaap to ifrs must be made. ignore income taxes. required: (a) prepare journal entries for research and development costs for the years ending december 31, 2017, and december 31, 2018, under (1) u.s. gaap and (2) ifrs. (c) prepare the entry(ies) that trecek would make on the december 31, 2017, and december 31, 2018, conversion worksheets to convert u.s. gaap balances to ifrs.

Answers: 1

Answer

Business, 22.06.2019 14:50

Pear co.’s income statement for the year ended december 31, as prepared by pear’s controller, reported income before taxes of $125,000. the auditor questioned the following amounts that had been included in income before taxes: equity in earnings of cinn co. $ 40,000 dividends received from cinn 8,000 adjustments to profits of prior years for arithmetical errors in depreciation (35,000) pear owns 40% of cinn’s common stock, and no acquisition differentials are relevant. pear’s december 31 income statement should report income before taxes of

Answers: 3

Answer

Business, 22.06.2019 21:00

At present, the united states has an embargo against north korea because a. the two countries have extremely poor political relations. b. north korea will not adopt a capitalist government. c. north korean products are too difficult to use. d. north korea has an embargo on american products. e. products from north korea are in higher demand than american-made products.

Answers: 2

Answer

You know the right answer?

Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many yea...

Questions