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Exam 11: Reporting and Analyzing Equity

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Question 51

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The stockholders' equity section of a corporation's balance sheet follows: (1)Assuming that the preferred stock is not callable and no dividends are in arrears,compute the book values per preferred share and per common share. (2)Assuming that the preferred stock has a call price of $30 per share and there is one year of cumulative preferred dividends is in arrears,compute the book values per preferred share and per common share.

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Question 52

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_________________ is a corporation's own stock that has been reacquired.

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Question 53

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Minimum legal capital requirements often prohibit dividends when the dividends reduce stockholders' equity below the minimum specified amount.

A company has 500,000 common shares authorized,400,000 common shares issued and 15,000 common shares in treasury stock at the current year-end.It paid $0.24 per share in cash dividends during the year.The year-end market price of the stock is $15.Calculate (1)the total dividends paid and (2)the dividend yield.

Changes in accounting estimates are accounted for in current and future periods.

What are the rights generally granted to common stockholders?

A company has 40,000 shares of common stock outstanding.The stockholders' equity applicable to common shares is $470,000 and the par value per common share is $10.The book value per share is:

A class of stock that does not have a par value and can usually be issued at any price without creating a minimum legal capital deficiency is called:

A stock option is also called a stock dividend.

A company issued 60 shares of $100 par value stock for $7,000 cash.The total amount of contributed capital is:

Explain how both a stock split and a stock dividend affect the computation of the weighted average number of shares outstanding.

The following selected transactions took place during the current year for a company: $\begin{array}{|l|l|}\hline \text { March 25 } & \begin{array}{l}\text { Declared a \$2 per share cash dividend on 20,000 shares of common Stock } \\\text { outstanding. }\end{array} \\\hline \text { April 20 } & \text { Paid the cash dividends declared on March 25. } \\\hline \text { Dec. 31 } & \begin{array}{l}\text { Closed the \$52,000 credit balance in Income Summary that reflects net } \\\text { incometo Retained Earnings. }\end{array} \\\hline\end{array}$ (a)Prepare the journal entries for these transactions. (b)If Retained Earnings had a $75,000 credit balance on January 1,calculate its year-end balance as of December 31.

Treasury stock is classified as:

Shamrock Company had net income of $30,000.On January 1,there were 8,000 shares of common stock outstanding.On April 1,the company issued an additional 2,000 shares of common stock.The company declared a $2,700 dividend on its noncumulative,nonparticipating preferred stock.There were no other stock transactions.The company has an earnings per share of:

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 stockholders' 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. stockholders of record. Feb. 28 Paid the dividend declared on January 5 What is the amount of the dividend declared?

Identify and describe the two main components of stockholders' equity.

A company reported stockholders' equity on January 1 of the current year as follows: Common Stock,$5 par value,1,000,000 shares authorized,600,000 shares issued; Contributed Capital in Excess of Par Value,Common Stock,$1,025,000; Retained Earnings,$2,850,000.Prepare journal entries to record the following transactions:

A stock dividend transfers:

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 company issued 7% preferred stock with a $100 par value.This means that: