Problem 1:
Ryniak Corporation's common shares are currently selling on a stock exchange at $85 per share; and a recent balance sheet shows the following information
Ryniak Corporation
Shareholder's Equity
April 30,2011
Contributed Capital:
Preferred Shares, $2.50 cumulative, 1000 shares
authorized, issued and outstanding....................................................$50,000
Common shares, 4,000 shares authorized, issued, and outstanding.....80,000
Total Contributed Capital........................................................................$130,000
Retained Earnings..................................................................................$150,000
Total Shareholder's Equity......................................................................$280,000
To do:
a) What is the market value of the corporation's common shares?
b) How much capital was contributed by the residual owners of the company
c) If no dividends are in arrears, what are the book values per share of the preferred shares and the common shares
d) If two years preferred dividends are in arrears what are the book values per share of the preferred shares and the common shares?
e) If two year's preferred dividends are in arrears and the preferred shares are callable at $55 per share what are the book values per share of the preferred shares and the common shares?
f) If two years preferred dividends are in arrears and the board of directors declares dividends of $10,000 what total amount would will be paid to preferred and common shareholders? What is the amount of dividends per share for the common shares
Problem 2:
The equity sections from the 2011 and 2012 balance sheets of Henns Corporation appeared as follows:
Henns Corporation
Shareholders' Equity
December 31, 2011
Contributed Capital:
Common shares, unlimited shares authorized,
350,000 shares issued............................................................$8,750,000
Retained Earnings......................................................................1,960,720
Total Shareholders equity...........................................................$10,710,720
Henns Corporation
Shareholders Equity
December 31, 2012
Contributed capital:
Common shares, unlimited shares authorized,
385,000 shares issued.......................................................$9,660,000
Retained Earnings...............................................................2,200,500
Total Shareholders Equity................................................$11,860,500
On February 11, May 24, August 13, and again on December 12, 2012, the board of directors declared $0.25 per share cash dividends on the outstanding shares. 15,000 common shares were issued on August 1, 2012 and another 20,000 were issued on November 2, 2012
Required: Under the assumption that there were no transactions affecting retained earnings other than the ones given, determine the 2012 net income of Henns Corporation. Show your calculations.