Reference no: EM131716808

Question 1 - Stockholders' Equity Section of Balance Sheet Premium Imports Inc. retails racing products for BMWs, Porsches, and Ferraris.

The following accounts and their balances appear in the ledger of Premium Imports Inc. on November 30, the end of the current year:

Common Stock, $10 par $840,000

Paid-In Capital in Excess of Par-Common Stock 252,000

Paid-In Capital in Excess of Par-Preferred Stock 100,800

Paid-In Capital from Sale of Treasury Stock-Common 63,300

Preferred 4% Stock, $50 par 1,680,000

Retained Earnings 3,582,000

Treasury Stock-Common 62,700

One hundred thousand shares of preferred and 400,000 shares of common stock are authorized. There are 5,700 shares of common stock held as treasury stock.

Prepare the Stockholders' Equity section of the balance sheet as of November 30, the end of the current year.

Question 2 - Dividends on Preferred and Common Stock

Yukon Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Canada, Montana, Idaho, Oregon, and Washington. Yukon Bike Corp. declared the following annual dividends over a six-year period ending December 31 of each year:

Year 1, $24,000;

Year 2, $30,000;

Year 3, $48,000;

Year 4, $132,000;

Year 5, $174,000; and

Year 6, $210,000.

During the entire period, the outstanding stock of the company was composed of 20,000 shares of 3% preferred stock, $100 par, and 100,000 shares of common stock, $10 par.

Instructions:

1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. If required, round your answers to the nearest cent. If the amount is zero, please enter "0".

2. Calculate the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to the nearest cent.

3. Assuming a market price per share of $165 for the preferred stock and $15 for the common stock, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock.