Chapter 11 Reporting and Interpreting Owners Equity 1 Ruth s Chris Steakhouse is the largest upscale steakhouse company in the United States based on total company and franchisee owned restaurants The company s menu features a broad selection of high quality USDA prime grade steaks and other premium offerings Currently there are 100 Ruth s Chris restaurants of which 50 are company owned and 50 are franchisee owned including 10 international franchisee owned restaurants in Mexico Hong Kong Taiwan and Canada Information from the company s annual report is shown below dollar amounts in thousands except share data a Common stock par value 0 01 100 000 000 shares authorized 33 981 509 issued and outstanding at December 31 2010 34 150 389 issued and outstanding at December 31 2011 b Additional paid in capital 198 304 in 2010 and 200 524 in 2011 c Accumulated deficit 118 282 in 2010 d Net income in 2011 was 19 549 No dividends were paid Balance Sheet Partial At Dec 31 2010 2011 2 During 2014 the following selected transactions affecting stockholders equity occurred for Orlando Corporation a April 1 Purchased in the market 200 shares of the company s own common stock at 20 per share b July 14 Sold 40 shares of treasury stock for 25 cash per share c Sept 1 Sold 30 shares of treasury stock for 15 cash per share Transaction General Journal Debit Credit 1 3 The records of Hollywood Company reflected the following balances in the stockholders equity accounts at December 31 2013 Common stock par 12 per share 50 000 shares outstanding Preferred stock 10 percent par 10 per share 5 000 shares outstanding Retained earnings 216 000 On September 1 2014 the board of directors was considering the distribution of a 85 000 cash dividend No dividends were paid during the previous two years You have been asked to determine dividend amounts under two independent assumptions show computations Preferred Common Noncumulative Total Per share Cumulative Total Per share 4 A recent annual report for Sears Roebuck and Co disclosed that the company paid preferred dividends in the amount of 119 9 million It declared and paid dividends on common stock in the amount of 2 per share During the year Sears had 1 000 000 000 shares of common authorized 387 514 300 shares had been issued 41 670 000 shares were in treasury stock Assume that the transaction occurred on July 15 General journal Debit Credit 5 On July 1 2014 Davidson Corporation had the following capital structure Case 1 The board of directors declared and issued a 50 percent stock dividend when the stock was selling at 12 per share Case 2 The board of directors voted a 6 to 5 stock split i e a 20 percent increase in the number of shares The market price prior to the split was 12 per share Items Before Dividend and Split After Stock Dividend After Stock Split 411 408 404 89 92 96 10 277 10 189 10 097 10 000 Common Stock Account Par value per share Shares outstanding Capital in excess of par Retained Earnings Total Stockholders equity 2 6 Chicago Company had the following stock outstanding and retained earnings at December 31 2014 The board of directors is considering the distribution of a cash dividend to the two groups of stockholders No dividends were declared during the previous two years Three independent cases are assumed Case A The preferred stock is noncumulative the total amount of dividends is 31 000 Case B The preferred stock is cumulative the total amount of dividends is 35 000 Case C Same as Case B except the amount is 90 000 Compute the amount of dividends in total and per share that would be payable to each class of stockholders for each case Preferred Stock Dividends Common Stock Dividends per Share Total Preferred Stock Common Stock Case A Case B Case C 3 Chapter 11 Reporting and Interpreting Owners Equity 1 Ruth s Chris Steakhouse is the largest upscale steakhouse company in the United States based on total company and franchisee owned restaurants The company s menu features a broad selection of high quality USDA prime grade steaks and other premium offerings Currently there are 100 Ruth s Chris restaurants of which 50 are company owned and 50 are franchisee owned including 10 international franchisee owned restaurants in Mexico Hong Kong Taiwan and Canada Information from the company s annual report is shown below dollar amounts in thousands except share data a Common stock par value 0 01 100 000 000 shares authorized 33 981 509 issued and outstanding at December 31 2010 34 150 389 issued and outstanding at December 31 2011 b Additional paid in capital 198 304 in 2010 and 200 524 in 2011 c Accumulated deficit 118 282 in 2010 d Net income in 2011 was 19 549 No dividends were paid Shareholders equity deficit Common stock Additional paid in capital Accumulated deficit Total stockholders equity Balance Sheet Partial At Dec 31 2010 2011 340 198 304 118 282 80 362 342 200 524 98 733 102 133 Common stock par value 01 per share 100 000 000 shares authorized 33 981 509 shares issued and outstanding at December 31 2010 34 150 389 shares issued and outstanding at December 31 2011 2 During 2014 the following selected transactions affecting stockholders equity occurred for Orlando Corporation a April 1 Purchased in the market 200 shares of the company s own common stock at 20 per share b July 14 Sold 40 shares of treasury stock for 25 cash per share c Sept 1 Sold 30 shares of treasury stock for 15 cash per share Transaction General Journal Debit Credit a b c Treasury stock Cash Treasury stock Capital in excess of par Cash Cash Capital in excess of par Treasury stock 4 000 1 000 450 150 4 000 800 200 600 4 3 The records of Hollywood Company reflected the following balances in the stockholders equity accounts at December 31 2013 Common stock par 12 per share 50 000 shares outstanding Preferred stock 10 percent par 10 per share 5 000 shares outstanding Retained earnings 216 000 On September 1 2014 the board of directors was considering the distribution of a 85 000 cash dividend No dividends were paid during the previous two years You have been asked to determine dividend amounts under two independent assumptions show computations Preferred Common Noncumulative Total Per share Cumulative Total Per share 5 000 1 00 80 000 1 60 15 000 3 00 70 000 1 40 4 A recent annual report for Sears Roebuck and Co disclosed that the company paid preferred dividends in the amount of 119 9 million It declared and paid dividends on common stock in the amount of 2 per share
View Full Document
Unlocking...