Knapp Industries began business on January 1, 2018 by issuing all of its 1,550,000 authorized shares of its $1 par value common
stock for $30 per share. On June 30, Knapp declared a cash dividend of $1.25 per share to stockholders of record on July 31. Knapp paid the cash dividend on August 30. On November 1, Knapp reacquired 310,000 of its own shares of stock for $35 per share. On December 22, Knapp resold 155,000 of these shares for $41 per share. Required:
a. Prepare all of the necessary journal entries to record the events described above.
b. Prepare the stockholders' equity section of the balance sheet as of December 31, 2018 assuming that the net income for the year was $8,000,000
The capitalistic system states that individuals are allowed to own their and enjoy their own personal property. In each country laws generally subordinate the right to private property to the well being of society.
The right to inheritance refers to the right that an individual has to decide who will own his/her properties after they pass away. Unless stated otherwise, a person's offsprings are generally entitled to inherit the person's properties.
In this case, Chet is entitled to own his landscaping business (private property) and when he passes away his son, Josh, will inherit it.
Individual strategic plan: It is a plan created for achieving personal goal. These plan define how important is the goal to individual and what all sacrifice that each can bear to achieve that personal goal. Before developing an individual strategic plan, it is important to evaluate personal strength and weakness.
In the given case, Procter & Gamble have produced different products with unique and separate brand name as they are using Individual strategy, so that each brand should be clear with its usage and can be helful in penetrating in market.
a. To calculate the expected return of the portfolio, we simply multiply the Expected return of the stock with the weight of the stock in the portfolio.
Thus, the expected return of the client's portfolio is,
w1 * r1 + w2 * r2
85% * 18% + 15% * 6% = 16.20%
The standard deviation of a portfolio with a risky and risk free asset is equal to the standard deviation of the risky asset multiply by its weightage in the portfolio as the risk free asset like T-bill has zero standard deviation.
85% * 42% = 35.70%
b. The investment proportions of the client is equal to his investment in T-bills and risky portfolio. If the risky portfolio investment is considered of the set proportion investment in Stock A, B & C then the 85% investment of the client will be divided in the following proportions,
