Accounting Text and Cases Problem 9-1,2,5,6,7

Problem 9-1

a.

with current liablilities

Debt equity ratio

97,920/146880 = 66.7%

Excluding current liabilities

With out current liabilities

73,440/146,880= 50%

Debt capitalization ratio

73,440/220320= 33%

b.

Debt Equity ration and Debt capitalization ratio measure of funds the company has borrowed from creditors opposite to owners. It indicates the total capital structure the company has. It also shows the risk of borrowings with fix debt and analize how to increase the profitability with the shareholders.

Problem 9-2

Basic earnings per share

19,550,000-3,900,000/2,000,000= 7.83

Diluted earnings per share

19,550,000-3,900,000/2,000,000+(200,000-100,000)= 7.45

Problem 9-5

1.

Preferred Stock 1,200,000

Retained earnings 168,000

Cash 1,368,000

2.

Preferred Stocks Dividend 224,000

Dividend Payable 224,000

3.

Common Stock Dividend 1,500,000

Dividend Payable 1,500,000

Problem 9-7

a. April 15

Cash 1,500,000

Common Stock 1,500,000

b. December 21

Retained Earnings 400,000

Paid in Capital 400,000

c. July 1

Cash 900,000

Common Stock 900,000

d. November 15

Treasury Stock 420,000

Cash 420,000

e. December 15

Cash 230,000

Treasury Stock 210,000

Paid-in Capital 20,000

f. Sept 15

Cash 175,000

Paid in capital 35,000

Treasury stock 210,000

g. Dec 24

Retained earnings 150,000

Dividends payable 150,000

h. Jan 24

Dividends payable 150,000

Cash 150,000