Problem: ABC Industries reported the following stockholders' equity section of its balance sheet at December 31, 2005.
December 31, 2005 2004
Stockholders' equity
8.5% cumulative preferred stock, $25 par value $ 450,000 $ 375,000
Common stock, $5 par value 680,000 575,000
Paid-in capital in excess of par value, common 4,050,000 2,500,000
Retained earnings 9,400,300 7,300,800
Treasury stock (1,970,050) (1,510,000)
Total stockholders' equity $12,610,250 $9,240,800
The company has paid cash dividends annually for 24 years. There are no dividends in arrears. The date of declaration is always March 1 and the amount of dividends declared is always 25% of prior year net income. Year 2004 net income was $2.0 million. At year-end 2005, the average cost of treasury stock was $31 per share. At year-end 2004, the average price of treasury stock was $25.
Calculate or determine:
Q1. How many preferred shares have been issued as of the end of 2005 and 2004?
Q2. How many common shares have been issued as of the end of 2005? As of year-end 2004?
Q3. How many treasury shares are there at year-end 2005 and at year-end 2004?
Q4. How many common shares are outstanding at year-end 2005 and at year-end 2004?
Q5. As of year-end 2005, what was the average price (at original issuance) of common stock?
Q6. What was the average selling price of the common shares issued during 2005?
Q7. What was net income for 2005?
Q8. What was the amount of the dividend per share paid to preferred stock during 2005?
Q9. What was the amount of the dividend per share paid to common stock during 2005?
(Assume there were 40,750 common shares outstanding at the date of the 2005 dividend distribution.)
Q10. What is the dividend per share that is scheduled to be paid to common stock in 2006? (Assume there will be no change in the number of shares outstanding between December 31, 2005 and the distribution of dividends in 2006.)