Required Information[The following information applies to the questions displayed below.]Nicole has been financing Nicole's Getaway Spa (NGS) using equity financing. Currently NGS has authorized 100,000 no-par preferred shares and 200,000 $2 par common shares. Outstanding shares include 57,000 preferred shares and47,000 common shares.Recently the following transactions have taken place.a. NGS Issues 1,350 preferred shares for $11 a share.b. NGS repurchases 1,350 common shares for $10 a share.c. On November 12, the board of directors declares a $0.30 cash dividend on each outstanding preferred share.d. The dividend is paid December 20.4. How would each transaction affect the ROE ratio? (Use + for Increase, - for decrease, and NE for no effect.)Transactiona.b.C.d.ROE

Return on equity (ROE) helps in measuring how efficiently the company is converting its equity into…

Answered: Nicole has been financing Nicole's…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Nicole has been financing Nicole’s Getaway Spa (NGS) using equity financing. Currently NGShas authorized 100,000 no-par preferred shares and 200,000 $2 par common shares. Outstandingshares include 50,000 preferred shares and 40,000 common shares.Recently the following transactions have taken place.a. NGS issues 1,000 preferred shares for $12 a share.b. NGS repurchases 1,000 common shares for $11 a share.c. On November 12, the board of directors declares a $0.10 cash dividend on each outstanding preferred share.d. The dividend is paid December 20.Required:1. Prepare the journal entries needed for each of the transactions.2. If you were a common shareholder concerned about your voting rights, would you preferNicole to issue additional common shares or additional preferred shares? Why?3. Describe the overall effect of each transaction on the assets, liabilities, and shareholders’equity of the company. (Use 1 for increase, 2 for decrease, and NE for no effect.)4. How would each transaction…
Nicole has been financing Nicole's Getaway Spa (NGS) using equity financing. Currently, NGS has authorized 100,000 $0.30 preferred shares and 200,000 common shares. Outstanding shares Include 50,000 preferred shares and 40,000 common shares. Recently the following transactions have taken place. a. NGS repurchased and cancelled 1,000 common shares for $10 a share. b. NGS Issued 1,000 preferred shares for $12 a share. c. On November 12, the board of directors declared a cash dividend on each outstanding preferred share. d. The dividend was pald December 20. Required: 1. Prepare the Journal entrles needed for each of the transactions. (If no entry Is required for a transaction/event, select "No Journal entry required" In the first account field.) View transaction llst Journal entry worksheet 2 3 4 NGS repurchased and cancelled 1,000 common shares for $10 a share. Note: Enter debits before credits. Event General Journal Debit Credit a. Record entry Clear entry Vlew general Journal 2 If you…
Prepare the journal entries to record the following transactions, in the books of Holman Dress Fitters: a. On 5/15/2020, purchased 4,000 shares of its own common stock at $20 per share. b. On 7/10/2020, sold 1,500 treasury shares for $26 cash, per share.
Dakota Skye opened Clean 4 U, Inc. on March 1, 2023. During March, the following transactions were completed: Mar. 1 Issued 5,000 shares of Clean 4 U, Inc. Common Stock for $15,000. Each share has a $1.50 par. 1 Paid $250 to BeamSpeed for internet and phone service for March. 1 Borrowed $8,000 on a 2-year, 7.4% note payable. 2 Paid $9,500 to purchase used floor and window cleaning equipment from a company going out of business ($4,850 was for the floor equipment and $4,650 for the window equipment). 3 Discussions with an insurance agent indicated that providing outside window cleaning services would cost too much to insure. Dakota sold the window cleaning equipment for $4,485 cash. 3 Negotiated insurance coverage at a yearly rate of $12,840. Clean 4 U paid $3,210 cash for three months of coverage. 3 Hired 5 employees. Each will be paid $650 per 5-day work week (Monday-Friday). Employees will begin…
Assume that Echoing Green, featured in this chapter’s opener, makes an investment in Sustain Inc., a sustainability consulting firm. The company purchases 200 shares of Sustain stock for $15,000 cash plus a broker’s fee of $500 cash. Sustain has 500 shares of common stock outstanding, and Echoing Green will be able to significantly influence its policies. Required 1. Prepare the journal entry to record the investment in Sustain on January 1. 2. Sustain declares and pays a dividend of $1,000. Prepare the journal entry to record Echoing Green’s receipt of its share of the dividend on July 1. 3. Sustain reports net income of $5,000. Prepare the journal entry to record Echoing Green’s share of those earnings on December 31.
2. In January 2018, the management of ABC Company concludes that it has sufficient cash to purchase some short-term investments in bonds and shares. During the year, the following transactions occurred. Feb. 1 Purchased 500 shares of DET shares for 45,000TL. Mar. 1 Purchased 600 shares of STL shares for 30,000TL. Mar.25 DET declared 0.90TL dividends per share payable on September 1. June 1 Purchased 40 1,000TL 9% CTN bonds for 60,000TL. Interest is payable semiannually on June 1 and November 1. July 1 Sold 200 shares of DET and collected totally 19,880TL. Aug. 1 Received a 1.5TL per share cash dividend on the STL shares. Sept. 1 Received cash dividend on DET shares. Oct. 1 Sold 20 CTN bonds and collected totally 25,750TL. Nov. 1 Received the semiannual interest on CTN bonds. Required: Journalize and post the transactions.
Cool Company has decided to take their company public on January 1, 2014. Cool company had 1,000 shares authorized. The following transactions occurred. a.) Jean grey issues 5,000 shares for $15 per share during their IPO on January 1, 2014. each share has a par value of $5. Record the journal entry for this transaction. Please label debits and credits and include classification of each account. b.) On January 1, 2015, Cool company bought back 2,000 shares from the open market at a price of $25 per share. Record the journal entry for this share repurchase. Label debits and credits and include classification of each account.
Elroy Corporation repurchased 3,200 shares of its own stock for $40 per share. The stock has a par of $20 per share. A month later, Elroy resold 800 shares of the treasury stock for $48 per share. Required a. Record the two events in general journal format. b. What is the balance of the treasury stock account after these transactions? Complete this question by entering your answers in the tabs below. Required A Required B Record the two events in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet A Elroy Corporation repurchased 3,200 shares of its own stock for $40 per share. Record the transaction. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal
All computations must be done and shown in detail a) You currently own 600 shares of JKL, Inc. JKL is an all-equity firm that has 75,000 shares of stock outstanding at a market price of $40 a share. The company’s earnings before interest and taxes are $140,000. JKL has decided to issue $1 million of debt at 8 percent interest. This debt will be used to repurchase shares of stock. How many shares of JKL stock must you sell to unlever your position if you can loan out funds at 8 percent interest? b) If the cost of equity is 25%, the WACC is 16% and cost of debt is 10%, what will be the implied D/E ratio? c) Why is financial leverage considered as a fair-weather friend? (Max 50 words)
PT FINDING, started operations in 2017. To obtain funding, the Company decided to create 2 schemes through the issuance of shares and applying for a loan to the Bank. The following are transactions related to the funding event: Issued 100,000 shares with a par value of $100 to the limited public Applying foraloanto Bank inthe amountof $500,000 byissuing 1 Aug 17 10 Aug 17 a 5-year 12% Bond at a realization rate of 97% Issued 150,000 sharesto acquire Landworth$ 250,000 withapar value of $100 20 sep 17 Received cash amounting to $300,000 to beexchanged for 200,000 shares. The par value ofthe sharesatthetime ofthetransaction remained $100 1 oct 17 30 nov 17 Based on the evaluation, the company gets a net profit (net income) per 6 months of $700,000 Declared and paid dividendsto allshareholders with avalue of $25 pershare. 30 nov 17 a. Prepare journal entries for the transactions! b. Calculate how much funding costs must be paid by the company from the 2 selected financing schemes until…
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