Describe the overall effect of each transaction on the

Reference no: EM13609753

Nicole has been financing Nicole's Gateway Spa (NGS) using equity financing. Currently NGS has authorized 100,000, $0.30 no-par preferred shares and 200,000, $1 par common shares. Outstanding shares include 50,000 preferred shares and 40,000 common shares. Recently the following trans actions took place.

a. NGS repurchases 1,000 common shares for $10 a share

b. NGS issues 1,000 preferred shares for $12 a share

c. On November 12, 2011, the board of directors declared a cash dividend on each-outstanding preferred share.

d. the dividend is paid December 20, 2011.

Required: 1. Prepare journal entries needed for each of the transactions.

2. If you were a common shareholder concerned about your voting rights, would you prefer Nicole to issue additional common shares or additional preferred shares? Why?

3.Describe the overall effect of each transaction on the assets, liabilities, and shareholders' equity of the company. (Use + for increase, - for decrease, and NE for no effect)

4. How would each transaction affect the ROE ratio?

Reference no: EM13609753

Questions Cloud

When the market price of a subsidys stock increases how : when the market price of a subsidys stock increases how does the accounting differ between a trading security and a

Consider a random sample of size n from a poisson : consider a random sample of size n from a poisson distribution xi poim.a find the crlb for the variances of

A population has a mean of 200 and a standard deviation of : a population has a mean of 200 and a standard deviation of 50. a simple random sample of size 100 will be taken and the

How can the concept of batch-level activites be applied to : how can the concept of batch-level activites be applied to an airline? more specifically what are two examples of

Describe the overall effect of each transaction on the : nicole has been financing nicoles gateway spa ngs using equity financing. currently ngs has authorized 100000 0.30

A student who waits for two buses every day records the : a a student who waits for two buses every day records the status of the arrival of each bus. the bus is either late on

Snipes construction paid for earth-moving equipment by : snipes construction paid for earth-moving equipment by issuing a 300000 3-year note that specified 2 interest to be

Superstrut is considering replacing an old press that cost : superstrut is considering replacing an old press that cost 80000 six years ago with a new one that would cost 245000.

Hoyle company traded machinery with a book value of 285000 : hoyle company traded machinery with a book value of 285000 and a fair value of 270000. it received in exchange from

User Account

All Pages