EX 13-20 Effect of stock split

Gino’s Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino’s Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1 stock split (4 additional shares for each share issued).

a. What will be the number of shares outstanding after the split?

b. If the common stock had a market price of $200 per share before the stock split, what would be an approximate market price per share after the split?


Answer:
a. 500,000 shares (100,000 × 5)
b. $40 per share ($200/5)

Popular posts from this blog

EX 10-13 Depreciation by two methods

A storage tank acquired at the beginning of the fiscal year at a cost of $344,000 has an estimated residual value of $50,000 and an estimated useful life of 16 years. Determine the following: (a) the amount of annual depreciation by the straight-line method and (b) the amount of depreciation for the first and second years computed by the doubledeclining-balance method. Answer: a. 6 1/4% of ($344,000 – $50,000) = $18,375 or [($344,000 – $50,000)/16] b. Year 1: 12.5% of $344,000 = $43,000    Year 2: 12.5% of ($344,000 – $43,000) = $37,625
Read more

EX 10-11 Depreciation by units-of-production method

Image
Prior to adjustment at the end of the year, the balance in Trucks is $275,900 and the balance in Accumulated Depreciation—Trucks is $91,350. Details of the subsidiary ledger are as follows: Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Beginning of Year Miles Operated During Year 1 $75,000 $15,000 200,000 miles — 19,500 miles 2 38,000 3,000 200,000 $ 8,050 36,000 3 72,900 9,900 300,000 60,900 25,000 4 90,000 20,000 250,000 22,400 26,000 a. Determine the depreciation rates per mile and the amount to be credited to the accumulated depreciation section of each of the subsidiary accounts for the miles operated during the current year. b. Journalize the entry to record depreciation for the year. Answer: a. Depreciation per Rate per Mile: Truck #1 ($75,000 – $15,000)/200,000 = $0.30 Truck #2 ($38,000 – $3,000)/200,000 = $0.175 Truck #3 ($72,900 – $9,900)/300,000 = $0.21 Truck #4 ($90,000 – $20,000)/250,000 = $0.28        Cred...
Read more

EX 13-24 EPS

Image
Procter & Gamble (P&G) is one of the largest consumer products companies in the world, famous for such brands as Crest® and Tide®. Financial information for the company for three recent years is as follows: Fiscal Years Ended (in millions) 2009 2008 2007 Net income $11,293 $11,798 $10,063 Preferred dividends $192 $176 $161 Average number of common shares outstanding 2,952 3,081 3,159 a. Determine the earnings per share for fiscal years 2009, 2008, and 2007. Round to the nearest cent. b. Evaluate the growth in earnings per share for the three years in comparison to the growth in net income for the three years. Answer: a. Earnings per Share = Avg.Number of Common Shares Outstanding Net Income − Preferred Dividends  2009 Earnings per Share = 2,952 shares $11,293 − $192  = $3.76 per share  2008 Earnings per Share = 3,081 shares $11,798 − $176  = $3.77 per share  2007 Earnings per Share = 3,159 shares $10,063 − $161  = $3.13 per share b. 2009 2008 2007 ...
Read more