Question

The Mayfair Corporation went public on January 1, 2015, with an initial public offering of 10,000,000...

The Mayfair Corporation went public on January 1, 2015, with an initial public offering of 10,000,000 common shares, $1 par value, at a market price of $3 per share.

Since then, the following equity transactions had occurred:

In 2016, a 10% stock dividend was issued. At the time, the Mayfair common shares were trading at $6 per share.

In 2017, a 3-for-1 forward stock split was executed. At the time, the Mayfair common shares were trading at $12 per share.

In 2018, 500,000 common shares were repurchased on the open market at a price of $15 per share.

On December 31, 2018, the company declared and paid its first cash dividend of $0.1 per share on all outstanding common shares.

Required

1. Calculate the par value per share and the number of shares outstanding for the Mayfair Corporation on December 31, 2018.

Dec 31, 2018 shares outstanding Answer
Dec 31, 2018 par value. Round to two decimal places. $ Answer

2. Prepare a spreadsheet to illustrate the financial effects of each of the above share transactions.

Enter amounts in thousands (i.e., $10,000,000 = $10,000). Use a negative sign with answers to indicate a reduction in an account balance.

The Mayfair Corporation


Transaction (in thousands)

Initial Public
Offering

Stock
Dividend

Stock
Split

Share
Repurchase

Cash
Dividend
Balance
Sheet
Totals
Assets
Cash $Answer $Answer $Answer $Answer $Answer $Answer
Shareholders’ Equity
Common Stock Answer Answer Answer Answer Answer Answer
APIC Answer Answer Answer Answer Answer Answer
Retained Earnings Answer Answer Answer Answer Answer Answer
Treasury stock Answer Answer Answer Answer Answer Answer
Total Shareholders’ Equity

Homework Answers

Answer #1

1.

Dec 31, 2018 shares outstanding 32,500,000
Dec 31, 2018 par value $ 0.33

2.

The Mayfair Corporation
Transaction Initial Public Offering Stock Dividend Stock Split Share Repurchase Cash Dividend Balance Sheet Totals
Assets
Cash 30,000 0 0 - 7,500 - 3,250 19,250
Shareholders' Equity
Common Stock 10,000 1,000 0 0 0 11,000
APIC 20,000 5,000 0 25,000
Retained Earnings 0 - 6,000 0 - 3,250 - 9,250
Treasury Stock 0 - 7,500 - 7,500
Total Shareholders' Equity 19,250
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