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Exam 11: Reporting and Interpreting Stockholders Equity

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Question 31

Multiple Choice

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A company reported the following asset and liability balances at the end of 2018 and 2019: If the company paid dividends totaling $5,000,what is the amount of net income for 2019?

A) $20,000.
B) $105,000.
C) $80,000.
D) $25,000.

E) C) and D)
F) B) and D)

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Question 32

Multiple Choice

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RKJ Company has provided the following information: • 100,000 shares of $5 par value common stock are authorized • 70,000 shares have been issued • 65,000 shares are outstanding - Which of the following statements is correct?

A) RKJ has 35,000 shares of treasury stock.
B) RKJ has 30,000 shares of treasury stock.
C) RKJ can issue an additional 35,000 shares of common stock.
D) RKJ can issue an additional 30,000 shares of common stock.

E) B) and D)
F) None of the above

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Question 33

Multiple Choice

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Wendell Company provided the following pertaining to its accounting year that ended December 31,2019: • Common stock with a $10,000 par value was sold for $50,000 cash • Cash dividends totaling $20,000 were declared,of which $15,000 were paid • Net income was $70,000 • A 5% stock dividend resulted in a common stock distribution,which had a $5,000 par value and a $23,000 market value • Treasury stock repurchased in a prior year for $9,000 was resold for $7,000 and in the journal entry to record the sale,Additional paid-in capital was debited for the amount of the difference between the repurchase price and the resale price - What is the amount of increase in Wendell's total stockholders' equity for the year ended December 31,2019?

The issue of $5 par value common stock for $18 per share results in an $18 credit to the common stock account for each share issued.

Which of the following correctly describes the effect of declaring and distributing a common stock dividend?

The dividend yield ratio increases when the market price per share increases.

A stock split results in the reduction of the par or stated value per share and a proportionate increase in the number of shares outstanding.

A small stock dividend:

For the listed items below,identify the effects on cash flow from financing activities as increasing (I),decreasing (D),or (N)having no effect on financing cash flows:

A large stock dividend:

Which of the following statements about earnings per share (EPS) is correct?

Bob Jones is a sole proprietor who began his business in 2019 with $20,000 cash.During the year 2019,he earned revenues of $180,000,incurred expenses of $75,000,and withdrew $120,000.Which of the following is true for the sole proprietorship?

Wendell Company provided the following pertaining to its accounting year that ended December 31,2019: • Common stock with a $10,000 par value was sold for $50,000 cash • Cash dividends totaling $20,000 were declared,of which $15,000 were paid • Net income was $70,000 • A 5% stock dividend resulted in a common stock distribution,which had a $5,000 par value and a $23,000 market value • Treasury stock repurchased in a prior year for $9,000 was resold for $7,000 and in the journal entry to record the sale,Additional paid-in capital was debited for the amount of the difference between the repurchase price and the resale price - What is the amount of net increase in Wendell's additional paid-in capital account during the year 2019?

Which of the following statements is correct?

Which of the following statements is true about partnership accounting?

Kirova Company has provided the following information: • Number of issued common shares,900,000 • Net income,$1,000,000 • Number of authorized common shares,1,000,000 • Weighted average number of outstanding common shares,800,000 • Number of treasury shares,100,000 What is Kirova's earnings per share (EPS) ?

Determine the effect of the following transactions on the financial statement components identified.Code your answers as follows: A: If the transaction results in an increase in the financial statement component. B: If the transaction results in a decrease in the financial statement component. C.If the transaction does not affect the financial statement component. Transaction 1: Common stock was sold at a price in excess of par value. Net income _____ Total assets _____ Stockholders' equity _____ Transaction 2: Treasury stock was purchased using cash. Net income _____ Total assets _____ Stockholders' equity _____ Transaction 3: Treasury stock was resold for cash at a price less than the treasury stock's cost. Net income _____ Total assets _____ Stockholders' equity _____ Transaction 4: Treasury stock was resold for cash at a price greater than the treasury stock's cost. Net income _____ Total assets _____ Stockholders' equity _____

Total assets remain the same when a company uses cash to purchase treasury stock.

The dividend yield ratio increases when a cash dividend is paid.

The following information is provided for Slickers,Inc.for year 2019: • Preferred stock,7%,$50 par value,1,000 shares issued and outstanding • Common stock,$100 par value,2,000 shares issued and outstanding • Dividends in arrears for 2017 and 2018 • Total dividends declared and paid during 2019 totaled $25,000 - How much of the dividend was paid to the common stockholders during 2019 assuming the preferred stock is noncumulative?