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Exam 11: Stockholders Equity

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Question 91

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Select the best answer from the list below to complete statements that follow. $\begin{array} { l l l } \text { Authorized shares } & \text { treasury stock } & \text { book value per share } \\\text { issued shares } & \text { stock dividend } & \text { par value per share } \\\text { outstanding shares } & \text { additional paid-in-capital } & \text { market value per share } \\\text { stock split } & \text { dividend payout ratio } & \text { retained earnings }\end{array}$ -An arbitrary amount that is stated on the face of the stock certificate is __________.

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Question 92

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All of the following are reasons for a company to repurchase its previously issued stock,except

A) to support the market price of the stock.
B) to resell to employees.
C) to increase the shares outstanding.
D) for bonuses to employees.

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Question 93

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Explain the two ways that a dividend rate on preferred stock may be stated by giving examples.

CarWorks Company has 100,000 authorized shares of $4 par common stock.The company issued 40,000 shares at $8.Subsequently,CarWorks declared a 2% stock dividend on a date when the market price was $11 a share.What is the amount transferred from the Retained Earnings account to paid-in capital accounts as a result of the stock dividend?

The book value per share for a corporation is

Treasury stock is stock that has been issued,but not currently outstanding.

A sole proprietorship is a separate entity for legal purposes.

Many firms operate at a dividend payout ratio of less than 50%.Why don't firms pay a larger percentage of income as dividends?

Lakeview Company reported the following amounts on its balance sheet at December 1, 2017: $\begin{array}{lr}\text { Preferred stock, } \$ 2 \text { par, } 3,000 \text { shares issued and outstanding } & \$ 6,000 \\\text { Common stock, } \$ 10 \text { par, } 8 \%, 400 \text { shares issued and outstanding } & 4,000 \\\text { Additional paid-in capital—common } & \underline{22,000} \\\text { Total contributed capital } & \$ 32,000 \\\text { Retained earnings } & \underline{48,000} \\\text { Total stockholders' equity } & \underline{\$ 80,000}\end{array}$ The following transactions occurred during December: 1. Declared a 20% stock dividend on common stock on December 3, when the stock was selling at $12 per share. The stock dividend will be distributed on December 20, 2017. 2. Distributed the common stock dividend on December 20. 3. Approved a 2-for-1 stock split of the common stock on December 28, when the stock was selling for $20 per share. A) $\text { Show the effect of the transactions on the accounting equation. }$ B) Answer the following questions: 1. How many common shares are outstanding at December 31,2017 ? 2. What effect will the stock split have on the stock's market value?

Comprehensive income is

Using the concept of comprehensive income,which of the following items is included as part of comprehensive income but not as part of net income?

Perry Corporation issues 20,000 shares of $0.50 par common stock for $6 per share;the Additional Paid-In Capital-Common account will increase by

Use the comparative financial statements of Penny Company for the year ended December 31,2017 to answer the following question(s). Penny Company Statement of Stockholder's Equity For the Year Ended December 31,2017​ Required (1)What is the primary cause of the change in Penny's stockholders' equity from January 1,2017,to December 31,2017? (2)Did Penny declare dividends during 2017? How do you know? Which items would be included as part of comprehensive income,if any?

Manson World reported the following: ​ Common stock,$1 par,200,000 shares authorized,100,000 shares issued and outstanding ​ What is the effect of a 2-for-1 stock split if the market value of the common stock is $20 per share when the stock split is declared?

Anole Company Anole Company was incorporated as a new business on January 1, 2017. The company is authorized to issue 20,000 shares of $5 par value common stock and 10,000 shares of 6%, $10 par value, cumulative, participating preferred stock. On January 1, 2017, the company issued 8,000 shares of common stock for $15 per share and 2,000 shares of preferred stock for $30 per share. Net income for the year ended December 31, 2017, was $375,000. -Refer to the information about Anole Company. The number of Anole's unissued shares of common stock at December 31,2017,is

Vegas Finance Company reported the following: ​ Common stock,$10 par,100,000 shares authorized,80,000 shares issued and outstanding ​ What is the effect of issuing 1,000 shares of common stock at $15 per share?

What is the difference between book value and market value of stock?

Vegan Company reported the following: ​ Common stock,$5 par,200,000 shares authorized,50,000 shares issued and outstanding ​ What is the effect of issuing 2,000 shares of common stock in exchange for land valued by a realtor at $36,000 if the common stock sells for $12 per share and is regularly traded?

Cash dividends become a liability to a corporation on the date of record.

How is treasury stock shown on the balance sheet?