Boise Bike Corp manufactures mountain bikes and distributes them through retail outlets in Montana, Idaho, Oregon, and Washington. Boise Bike Corp. has declared the following annual dividends over a six year period ending December 31 of each year: 2007, $8,000; 2008, $24,000; 2009, $60,000; 2010, $75,000; 2011, $80,000; and 2012, $98,000. During the entire period, the outstanding stock of the company was composed of 20,000 shares of 2% cumulative preferred stock, $75 par, and 50,000 shares of common stock, $5 par.

 Instructions

 

 1. Determine 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 forms, using the following column headings. Preferred Dividends Common Dividends Year Total Dividends Total Per Share Total Per Share 2007 $ 8,000 2008 24,000 2009 60,000 2010 75,000 2011 80,000 2012 98,000

 

 2. Determine the average annual dividend per share for each class of stock for the six-year period.

 

 3.Assuming a market price of $125 for the preferred stock and $13.75 for the common stock, calculate the average annual percentage return on initial shareholders investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock. 

 

PR 13-2B

Picasso Optics produces medical lasers for use in hospitals. The accounts and their balances appear in the ledger of Picasso Optics on November 30 of the current year as follows. Preferred 2% stock, $80 par (150,000 shares authorized, 75,000 shares issued)……………………………………………………..$6,000,000 Paid-in capital in Excess of Par-Preferred stock………………………..$225,000 Common Stock, $100 par (500,000 shares authorized, 150,000 shares issued)…………………………………………………….$15,000,000 Paid-in capital in Excess of Par-Common stock…………………………$1,800,000 Retained Earnings…………………………………………………………..$50,250,000 At the annual stockholders meeting on December 10, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately $15,500,000. The plan provided (a) that the corporation borrow $6,000,000, (b) that 45,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that a building, valued at $5,000,000, and the land on which it is located, valued at $487,500, be acquired in accordance with preliminary negotiations by the issuance of 52,500 shares of common stock. The plan was approved by the stockholders and accomplished by the following transactions: Jan. 12. Borrowed $6,000,000 from Livingston National Bank, giving a 5% mortgage note. 18. Issued 45,000 shares of preferred stock, receiving $85 per share in cash. 25. Issued 52,000 shares of common stock in exchange for land and a building according to the plan. No other transactions occurred during January Instructions Journalize the entries to record the foregoing transactions. PR 13-3B Daley Welding Corporation sells and services pipe welding equipment in Illinois. The following selected accounts appear in the ledger of Daley Welding Corporation on May 1,2012, the beginning of the current fiscal year: Preferred 2% stock, $40 par (50,000 shares authorized, 40,000 shares issued)……………………………………………………..$1,600,000 Paid-in capital in Excess of Par-Preferred stock………………………..$240,000 Common Stock, $8 par (1,000,000 shares authorized, 750,000 shares issued)…………………………………………………….$6,000,000 Paid-in capital in Excess of Par-Common stock…………………………$2,500,000 Retained Earnings…………………………………………………………..$43,175,000 During the year, the corporation completed a number of transactions affecting the stockholders equity. They are summarized as follows: a. Purchased 100,000 shares of treasury common for $1,500,000. b. Sold 60,000 shares of treasury common for $1,080,000. c. Issued 8,000 shares of preferred 2% stock at $50. d. Issued 150,000 shares of common for $362,500. e. Sold 25,000 shares of treasury common for $362,500. f. Declared cash dividends of $0.80 per share on preferred stock and $0.11 per share on common stock. g. Paid the cash dividends. Instructions Journalize the entries to record the transactions. identify each entry by letter.