Financial Accounting: An Integrated Statements Approach, 2nd Edition

Aug. 7 Sold 12,000 shares of treasury stock at $38, receiving cash.

Nov. 15 Declared semiannual dividends of $1.50 on the preferred stock and $0.08 on the common

stock (before the stock dividend). In addition, a 2% common stock dividend was declared

on the common stock outstanding. The fair market value of the common stock is

estimated at $35.

Dec. 15 Paid the cash dividends and issued the certificates for the common stock dividend.

Instructions

Journalize the transactions.

528 Chapter 11 Stockholders’ Equity: Capital Stock and Dividends

FINANCIAL ANALYSIS AND REPORTING CASES

The following dividend announcement was made by Campbell Soup Companyon November

18, 2004:

Campbell Soup Company today announced that the Company’s Board of Directors declared a

regular quarterly dividend on its capital stock of $.17 per share. The dividend is payable Janu-

ary 31, 2005 to shareholders of record at the close of business on January 3, 2005.

Campbell Soup had 410,000,000 common shares issued and outstanding on the dividend record

date. The most recent annual earnings were $647,000,000. Campbell’s stock price at the time of

the dividend record date was $30 per share.

a. What is the business purpose of a dividend?

b. Record Campbell Soup’s quarterly dividend declaration.

c. How is Campbell Soup’s dividend reported?

d. Calculate and interpret Campbell Soup’s annualized dividend yield and dividend payout

ratio to one place after the decimal point.

Yahoo’s Web portal provides stock market information for publicly traded companies. Go to

http://finance.yahoo.comon the Internet. Enter the symbol for Chevron Texaco Corp.using the

“Symbol Lookup” feature. Double-click on the symbol for the detailed market information for

Chevron Texaco. Once at the detailed Chevron Texaco page view, answer the follow questions:

a. What is Chevron Texaco’s historical, trailing 12 months (ttm) earnings per share?

b. What is Chevron Texaco’s annual dividend per share?

c. What is Chevron Texaco’s closing stock price?

d. Calculate Chevron Texaco’s dividend yield, using the closing stock price from (c).

e. What calendar date is the dividend “ex-dividend,” and what does this mean?

f. What calendar date is the dividend date, and what does this mean?

Phoenix Footwear Group, Inc., designs and distributes shoes under the SoftWalk®and Trotters®

brand names. The company made the following announcement in July 2004:

Phoenix Footwear Group, Inc. announced the pricing of its public offering of 2,500,000 shares

of common stock at a price of $12.50 per share....The Company plans to use the net offering

proceeds to pay a portion of the price for the pending Altama acquisition.

Altama Delta Corporationmanufactures high performance tactical and combat boots for the

Department of Defense. The acquisition was completed for a price of $39 million soon after the

Case 11-1

Campbell Soup Dividend

Policy

Case 11-2

Dividend information on the

Internet

Case 11-3

Capital stock dilution