User Account

All Pages

What adjustments would have to be made

Assignment Help Financial Accounting
Reference no: EM132937123

Question - 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 (2,100,000 shares at $5 par) $10,500,000

Capital in excess of par* 3,000,000

Retained earnings 26,500,000

Net worth $40,000,000

*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 $4,200,000 during the year. With 2,100,000 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? Show the new capital accounts.

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 130 shares?

d. What is the investor's total investment worth before and after the stock dividend if the P/E ratio remains constant?

Reference no: EM132937123

Questions Cloud

What would be the net present value of the cash flows : The machinery costs -$22,200,000 and would be depreciated straight-line to zero over 14 years. What would be the net present value of the cash flows
Management of humain resources : Apply the Warwick model to the approch of General electric campany to the management of its humain resources.
Which is income tax advantage of all qualified pension plans : Which is income tax advantage(s) of all qualified pension plans? Within limits, employer contributions are tax deductible to the employer.
Discuss the various effects that job loss has on individuals : Critically discuss the various effects that job loss has on individuals.
What adjustments would have to be made : What adjustments would have to be made to the capital accounts for a 10 percent stock dividend? Show the new capital accounts
Abbreviation for increased risks for workplace violence : Using the SAVT abbreviation for increased risks for workplace violence explain what it means and give examples of policies you can implement to protect workers.
Which statements correctly describe the manner : Which all statements correctly describe the manner in which money purchase pension plans are treated by the tax law EXCEPT?
What is the public policy to exception to employment at will : What is the public policy to exception to employment at will? Give one example of a termination that maybe construed as an exception to employment at will based
How much must you deposit annually into an account : How much must you deposit annually into an account that pays 5% annual interest to have $75,000 eight years from now? Assume all payments are made at the end

Reviews

Write a Review

Financial Accounting Questions & Answers

  Find what is the value of the growing perpetuity

Your Aunt has promised to leave annuity. The payments are expected to go on indefinitely and the interest rate is 9%. What is value of the growing perpetuity?

  What will be the expected impact on net income

Each unit sells for $50 with total variable costs per unit of $40. Given the above data, what will be the expected impact on net income

  Compute the average useful life of PPE assets

Monster Equipment has obtained the following data from its accounting records: Accumulated depreciation $340,000. Compute the average useful life of PPE assets

  Illustrate what is the number of shares that should be used

Illustrate what is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2007?

  Find how much yu will receive from social security

Assume you are retiring this year. how much yu will receive from social security and how much yu should have saved/ invested each year to comfortably live.

  Avril company makes collections

Avril Company makes collections on sales according to the following schedule:

  Why is adjustment for provision for deferred income taxes

Why is the adjustment for provision for deferred income taxes made in the operating section of the statement of cash flows in fiscal year 2016?

  Determine and create statement of retained earnings

Prepare 12-column worksheet foe the year ended december 31. you need not include account number or explanation of adjustment.

  Compute the eup for conversion costs is

Using FIFO method, the EUP for conversion costs is? JYD Corporation uses the process costing system. The quality control inspection takes place when the units

  Amount and character of martys recognized gain or loss

Marty is a 40% owner of MB Partnership. Marty has decided to sell his interest in the business to Emilio for $120,000 cash plus the assumption of his share of MB's liabilities. Assume Marty's inside and outside basis in MB are equal. What is the amou..

  Find how many units produced for the coming period

There are 40 units in beginning inventory, and the company would like to have 75 units in ending inventory. How many units should be produced for coming period?

  Provide the necessary journal entry at december

Provide the necessary journal entry at December 31, 2009. Provide the necessary journal entry at June 30, 2010. Provide the necessary journal entry at December 31, 2010.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd