The equity sections from Hovo Corporations 2013 and 2014 balance sheets follow. Stockholders Equity (December 31, 2013)

Question:

The equity sections from Hovo Corporation’s 2013 and 2014 balance sheets follow.

Stockholders’ Equity (December 31, 2013)

Common stock—$ 20 par value, 30,000 shares authorized,

17,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . $ 340,000

Paid- in capital in excess of par value, common stock . . . . . . . . . . . . 60,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,000

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 670,000

Stockholders’ Equity (December 31, 2014)

Common stock—$ 20 par value, 30,000 shares authorized,

19,000 shares issued, 1,000 shares in treasury . . . . . . . . . . . . . . . . . $ 380,000

Paid- in capital in excess of par value, common stock . . . . . . . . . . . . 104,000

Retained earnings ($ 40,000 restricted by treasury stock) . . . . . . . . . 295,200

779,200

Less cost of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (40,000)

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 739,200

The following transactions and events affected its equity during year 2014.

Feb. 15 Declared a $ 0.40 per share cash dividend, date of record five days later.

Mar. 2 Purchased treasury stock for cash.

May 15 Declared a $ 0.40 per share cash dividend, date of record five days later.

Aug. 15 Declared a $ 0.40 per share cash dividend, date of record five days later.

Oct. 4 Declared a 12.5% stock dividend when the stock’s market value is $ 42 per share.

Oct. 20 Issued the stock dividend that was declared on October 4.

Nov. 15 Declared a $ 0.40 per share cash dividend, date of record five days later.

Required

1. How many common shares are outstanding on each cash dividend date?

2. What is the total dollar amount for each of the four cash dividends?

3. What is the amount of the capitalization of retained earnings for the stock dividend?

4. What is the per share cost of the treasury stock purchased?

5. How much net income did the company earn during year 2014?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...