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Exam 11: Corporate Reporting and Analysis

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Question 1

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The following data has been collected about a company's stockholders' equity accounts: $\begin{array}{|l|r|}\hline \text { Common stock } \$ 10 \text { par value } 20,000 \text { shares authorized and } 10,000 \text { shares issued } & \$ 100,000 \\\hline \text { Contributed capital in excess of par value, common stock } & 50,000 \\\hline \text { Retained earnings } & 25,000 \\\hline \text { Treasury stock, } 1,000 \text { shares } & 11,500\\\hline\end{array}$ The treasury shares were all purchased at the same price.The cost per share of the treasury stock is:

A) $1.15
B) $1.28
C) $11.50
D) $10.50
E) $10.00

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Question 2

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Par value of a stock refers to the:

A) Issue price of the stock.
B) Value assigned to a share of stock by the corporate charter.
C) Market value of the stock on the date of the financial statements.
D) Maximum selling price of the stock.
E) Dividend value of the stock.

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Question 3

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Dividend yield is defined as the market price per share of a company's stock divided by its earnings per share.

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 ____________________________.

Match each of the following terms with the appropriate definitions:.

Preferred stock that the issuing corporation at its option may retire by paying a specified amount to the preferred stockholders plus any dividends in arrears is called:

The price-earnings ratio is calculated by dividing:

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:

On August 31,2013,Victory Corporation's common stock is priced at $30 per share before any stock dividend or split,and the stockholders' equity section of its balance sheet appears as follows.Assume that the company declares and immediately distributes a 100% stock dividend. $\begin{array}{lr}\text { Common stock }-\$ 7 \text { par value, } 95,000 \text { shares authorized, } 38,000 \text { shares }\\\text { issued and outstanding } & \$ 266,000 \\ \text { Paid-in capital in excess of par value, common stock } & 100,000 \\\text { Retained earnings } & 366,000 \\ \text { Total stockholders' equity } & \$ 732,000\end{array}$ What is the total amount in the Retained Earnings account immediately after the stock dividend?

A stock dividend transfers:

Identify and discuss the key differences between common and preferred stock.

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend during the current year: $\begin{array}{|l|r|}\hline \text { Preferred stock, } \$ 100 \text { par, } 6 \%, 5,000 \text { shares issued } & \$ 500,000 \\\hline \text { Common stock, } \$ 10 \text { par, } 75,000 \text { shares issued } & \underline{750,000} \\\hline \text { Total } & \$ 1,250,000\\\hline\end{array}$ Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

A corporation issued 6,000 shares of its $10 par value common stock in exchange for land that has a market value of $84,000.The entry to record this transaction would include:

A company has 1,000 shares of $100 par preferred stock.It also has 25,000 shares of common stock outstanding and its total stockholders' equity equals $500,000.The book value per common share is:

A company reported $990,000 in net income for the current year.Total weighted-average number of common shares outstanding are equal to 150,000 shares and the year-end market price is $79.20 per common share.Calculate the company's price-earnings ratio.

The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ____________________________.

A company's board of directors votes to declare a cash dividend of $0.75 per share.The company has 15,000 shares authorized,10,000 issued,and 9,500 shares outstanding.The total amount of the cash dividend is:

A company's outstanding stock consists of (a) 17,000 shares of noncumulative 7.50% preferred stock with a $10 par value and (b) 42,500 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: $\begin{array} { c c } 2013 & \$ 0 \\2014 & 28,000 \\2015 & 100,000 \\2016 & 198,000\end{array}$ What is the amount of dividends that the common stockholders receive for all years presented?

A company has 5,000 shares of $1 par value common stock and 6,000 shares of 2%,$98 par,noncumulative preferred stock outstanding.The balance in Retained Earnings at the beginning of the year was $750,000.Net income for the current year was $400,000.If the company paid a dividend of $3 per share on its common stock,what is the balance in Retained Earnings at the end of the year?

A company sold stock for $733,000.The shares had a par value of $6.26 each.After the transaction,the paid-in capital in excess of par common stock account had a balance of $420,000.How many shares did the company sell?