Question

The stockholders' equity section of The Seventies Shop is presented here. THE SEVENTIES SHOP Balance sheet (partial) ($ in thousands) Stockholders' equity: Preferred stock, $50 par value $ 0

Common stock, $5 par value $ 15,000
Additional paid in capital 45,000 Total paid-in capital 60,000
Retained earnings 48,000
Treasury stock (2,700) Total stockholders' equity $105,300 Based on the stockholders' equity section of The Seventies Shop, answer the following questions. Remember that all amounts are presented in thousands Problem 10-4B Part 1 Required: 1. How many shares of preferred stock have been issued? (Enter your answer in total number of shares, not in thousands.) Number of shares _____ Problem 10-4B Part 2 2. How many shares of common stock have been issued? (Enter your answer in total number of shares, not in thousands.) Number of shares __________
Problem 10-4B Part 3 3. Total paid-in capital is $60.00 million. At what average price per share were the common shares issued? Common share issued per share per share ________
Problem 10-4B Part 4 4. If retained earnings at the beginning of the period was $40 million and net income during the year was $10,850,000, how much was paid in dividends for the year? (Enter your answer in dollars not in millions.cl.e., 5 should be entered as 5,000,000).) Dividends paid Problem 10-4B Part 5 5. If the treasury stock was purchase at $18 per share, how many shares were purchased? (Enter your answer in total number of shares, not in thousands.) Number of shares ______
Problem 10-4B Part 6 6. How much was the dividend per share? (Hint Dividends are not paid on treasury stock ) (Round your answer to 2 decimal places.) Dividend per share __________

Answer 1

The Seventies Shop has not issued any preferred stock and has issued 3 million shares of common stock. The total paid-in capital is $60 million, leading to an average issuance price of $20 per share. The company paid $2.85 million in dividends, purchased 150,000 treasury shares, and the dividend per share is approximately $0.95.

Step-by-step explanation:

The stockholders' equity section of The Seventies Shop provides details for analysis. We can determine the number of shares, average issuance price, dividends paid, shares repurchased, and dividend per share.

1. Preferred stock issued: Since the value is $0, no preferred stock has been issued.
2. Common stock issued: With a par value of $5 and total common stock equity of $15,000 (in thousands), 3,000,000 shares of common stock have been issued (15,000,000 / 5).
3. Average issuance price: The average price per share is calculated by dividing the total paid-in capital by the number of issued shares. Total capital is $60 million (including common stock and additional paid-in capital), so the average price per share is $20 ($60,000,000 / 3,000,000 shares).
4. Dividends paid: To find the dividends paid, start with retained earnings at the beginning ($40 million) plus net income ($10.85 million) and subtract the ending retained earnings ($48 million). The dividends paid out would therefore be $2.85 million.
5. Treasury shares purchased: With treasury stock at $(2,700,000) and a purchase price of $18 per share, 150,000 shares were repurchased (2,700,000 / 18).
6. Dividend per share: To calculate this, divide the total dividends paid by the number of shares excluding those in treasury (3,000,000 issued - 150,000 treasury). That results in a dividend per share of approximately $0.95 ($2,850,000 / (3,000,000 - 150,000) shares).