November 2023 Dividends on Preferred and Common Stock Love Theatre Inc owns and operates movie theaters throughout New Mexico and

5 Problems- Accounting

Dividends on Preferred and Common Stock

Love Theatre Inc. owns and operates movie theaters throughout New Mexico and Utah. Love Theatre has declared the following annual dividends over a six-year period: 2007, \$16,000; 2008, \$48,000; 2009, \$65,000; 2010, \$90,000; 2011, \$115,000; and 2012, \$140,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 25,000 shares of cumulative, 2% preferred stock, \$80 par, and 100,000 shares of common stock, \$4 par.

Instructions:

1.  Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2007. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter “0”.

Year

Total
Dividends

Preferred Dividends

Common Dividends

Total

Per Share

Total

Per Share

2007

\$   16,000

\$

5.  Compute the price of \$19,200,577 received for the bonds by using the tables of present value in Appendix A. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount

\$

5.  Compute the price of \$148,882,608 received for the bonds by using the tables of present value in Appendix A. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

 Present value of the face amount \$[removed] Present value of the semi-annual interest payments \$[removed] Price received for the bonds \$[removed]

Problem 14-2A
Statement of Cash Flows—Indirect Method

The comparative balance sheet of Hinson Enterprises, Inc. at December 31, 2013 and 2012, is as follows:

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2013 are as follows:

a.                               Net income, \$220,500.

b.                              Depreciation reported on the income statement, \$72,975.

c.                               Equipment was purchased at a cost of \$142,450, and fully depreciated equipment costing \$39,200 was discarded, with no salvage realized.

d.                              The mortgage note payable was not due until 2014, but the terms permitted earlier payment without penalty.

e.                              7,000 shares of common stock were issued at \$35 for cash.

f.                                Cash dividends declared and paid, \$134,400.

Instructions:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. If needed, use the minus sign to indicate cash outflows, negative amounts or a decrease in cash.

 Hinson Enterprises, Inc.

 Statement of Cash Flows

 For the Year Ended December 31, 2013

 Cash flows from operating activities:

 [removed]

 \$ [removed]

 Adjustments to reconcile net income to net cash  flow from operating activities:

 [removed]

 [removed]

 Changes in current operating assets and liabilities:

 [removed]

 [removed]

 [removed]

 [removed]

 [removed]

 [removed]

 [removed]

 [removed]

 Net cash flow from operating activities

 \$ [removed]

 Cash flows from investing activities:

 [removed]

 \$ [removed]

 Net cash flow used for investing activities

 [removed]

 Cash flows from financing activities:

 [removed]

 \$ [removed]

 [removed]

 \$ [removed]

 [removed]

 [removed]

 [removed]

 Net cash flow used in financing activities

 [removed]

 [removed]

 \$ [removed]

 Cash at beginning of the year

 [removed]

 Cash at end of the year

 \$ [removed]

Problem 15-1A
Horizontal Analysis for Income Statement

For 2012, Eurie Company reported its most significant decline in net income in years. At the end of the year, H. Finn, the president, is presented with the following condensed comparative income statement:

Instructions:

1.  Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the base year. If required, round to one decimal place.

 Eurie Company

 Comparative Income Statement

 For the Years Ended December 31, 2012 and 2011

 2012

 2011

 Difference – Amount

 Difference – Percent

 Sales

 \$928,000

 \$800,000

 \$ [removed]

 [removed] %

 Sales returns and allowances

 70,000

 50,000

 [removed]

 [removed]

 Net sales

 \$858,000

 \$750,000

 \$ [removed]

 [removed]

 Cost of goods sold

 640,000

 500,000

 [removed]

 [removed]

 Gross profit

 \$218,000

 \$250,000

 \$ [removed]

 [removed]

 Selling expenses

 \$85,800

 \$65,000

 \$ [removed]

 [removed]

 43,400

 35,000

 [removed]

 [removed]

 Total operating expenses

 \$129,200

 \$100,000

 \$ [removed]

 [removed]

 Income from operations

 \$88,800

 \$150,000

 \$ [removed]

 [removed]

 Other income

 16,000

 10,000

 [removed]

 [removed]

 Income before income tax

 \$104,800

 \$160,000

 \$ [removed]

 [removed]

 Income tax expense

 9,200

 8,000

 [removed]

 [removed]

 Net income

 \$95,600

 \$152,000

 \$ [removed]

 [removed] %

2.  To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Problem 15-3A
Effect of Transactions on Current Position Analysis

Data pertaining to the current position of Brin Company are as follows:

Instructions:

1.  Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.

 a.  Working capital: \$[removed] b.  Current ratio: [removed] c.  Quick ratio: [removed]

2.  Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given above. Round ratios to one decimal place.

 Transaction Working Capital Current Ratio Quick Ratio a. Sold temporary investments at no gain or loss, \$90,000. \$[removed] [removed] [removed] b. Paid accounts payable, \$175,000. \$[removed] [removed] [removed] c. Purchased goods on account, \$125,000. \$[removed] [removed] [removed] d. Paid notes payable, \$200,000. \$[removed] [removed] [removed] e. Declared a cash dividend, \$160,000. \$[removed] [removed] [removed] f. Declared a common stock dividend on common stock, \$45,000. \$[removed] [removed] [removed] g. Borrowed cash from bank on a long-term note, \$300,000. \$[removed] [removed] [removed] h. Received cash on account, \$140,000. \$[removed] [removed] [removed] i. Issued additional shares of stock for cash, \$700,000. \$[removed] [removed] [removed] j. Paid cash for prepaid expenses, \$80,000. \$[removed] [removed] [removed]

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