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Exam 11: Reporting and Analyzing Equity

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Question 71

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A discount on stock occurs when a corporation sells its stock for a price greater than par value.

A) True
B) False

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Question 72

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The amount of income earned per share of a company's common stock is known as:

A) Restricted retained earnings per share
B) Earnings per share
C) Continuing operations per share
D) Dividends per share
E) Book value per share

F) B) and E)
G) A) and E)

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Question 73

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On May 1,a company's board of directors declared a 10% stock dividend to be distributed on June 1 to the stockholders of record on May 21.The company had 250,000 shares of $10 par value common stock outstanding with a market value of $22 per share.Prepare the journal entries required on May 1,May 21 and June 1.

A document that gives a designated agent the right to vote a stockholder's stock is called a _______________.

A corporation was formed on January 1.The corporate charter authorized 100,000 shares of $10 par value common stock.During the first month of operation,the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation.The entry to record this transaction would include:

____________________ preferred stock gives holders the option to exchange their preferred shares for common shares at a specified rate.

The following data were reported by a corporation: $\begin{array} { | l | r | } \hline \text { Authorized shares } & 20,000 \\\hline \text { Issued shares } & 15,000 \\\hline \text { Treasury shares } & 3,000 \\\hline\end{array}$ The number of outstanding shares is:

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends,the unpaid amount is called ____________________________.

Book value per common share is computed by:

A corporation sold 14,000 shares of its $10 par value common stock at a cash price of $13 per share.The entry to record this transaction would include:

If a company discovers a mistake in 2010 that was made in 2009,the company records the adjustment in the year ________.

A corporation declared and issued a 15% stock dividend on November 1.The following up-to-date information was available immediately prior to the dividend: $\begin{array}{|l|r|}\hline \text { Retained earnings } & \$ 750,000 \\\hline \text { Shares issued and outstanding } & 60,000 \\\hline \text { Market value per share } & \$ 15 \\\hline \text { Par value per share } & \$ 5 \\\hline\end{array}$ The amount that total stockholders' equity will increase (decrease) as a result of recording this stock dividend is:

What is the effect of dividend preferences on preferred stock? Explain how a dividend is distributed in the case of cumulative preferred stock with dividends in arrears.

The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

Match each definition with its term

Stocks that pay relatively large cash dividends on a regular basis are referred to as:

The Discount on Common Stock account reflects:

A company has 500 shares of $50 par value preferred stock outstanding and the call price of its preferred stock is $60 per share.It also has 20,000 shares of common stock outstanding and the total value of its stockholders' equity is $680,000.The company's book value per common share equals:

Polly's outstanding stock consists of (a)67,000 shares of cumulative 5% preferred stock with a $20 par value and (b)95,000 shares of common stock with a $1 par value.During its first four years of operation,the corporation declared and paid the following total cash dividends. $\begin{array} { c c } 2010 & \$ 0 \\2011 & 50,000 \\2012 & 180,000 \\2013 & 205,000\end{array}$ What is the amount of dividends that the Common Stockholders receive for all years presented?

Duke Corporation reports the following components of stockholders' equity on December 31,2010. $\begin{array}{lr} \text {Common stock- \$ 25 par value, 100,000 shares authorized, 45,000 shares issued}\\ \text { and outstandino}&\$1,125,000\\ \text { Paid-in capital in excess of par value, common stock } & 60,000 \\ \text { Retained earnings } & 460,000 \\ \text { Total stockholders' equity } & \$ 1,645,000 \\\end{array}$ In year 2011, the following transactions affected its stockholder's' equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $\$ 27$ cash per share. Jan. 5 Directors declared a $\$ 3$ per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. Mar. 3 Sold 1,000 shares of treasury stock for $\$ 28$ per share May 25 Sold 1,000 shares of treasury stock for $\$ 16$ per share June 15 Directors declared a $\$ 1.50$ per share cash dividend payable on July 15 to the June 30 stockholders of record July 15 Paid the dividend declared on June 15 What is the amount in the Retained Earnings account immediately after the dividend on July 15?