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Exam 10: Stockholders Equity

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Question 21

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Over the first four years of the company's life, it earned the following net income (loss) : $6,000; $3,000; $6,000, and ($2,000) . If the company's ending retained earnings is $10,000 after year 4, what is the average amount of dividends paid per year?

A) $3,000.
B) $7,000.
C) $0.
D) $750.

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Question 22

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In terms of total sales, assets, and earnings, the dominant form of business organization is the:

A) Sole proprietorship.
B) Partnership.
C) Corporation.
D) Limited liability company (LLC) .

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Question 23

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Why doesn't stockholders' equity equal the market value of equity?

Roberto Corporation was organized on January 1, 2012. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2012, Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8) . What is total stockholders' equity at the end of 2012?

Describe the primary advantages and disadvantages of a corporation in comparison to a sole-proprietorship or partnership.

Which of the following statements is not true regarding earnings per share?

A feature common to both stock splits and stock dividends is

Financial information for Retro Designs includes the following selected data: $\begin{array} { l r } \text { Net income (in millions) } & \$ 145 \\\text { Preferred stock dividends (in millions) } & \$ 25 \\\text { Shares outstanding (in millions) } & 240 \\\text { Stock price } & \$ 10.00\end{array}$ What is the company's earnings per share?

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of 2012 and has the following transactions affecting stockholders' equity in 2012. Record each of these transactions.

Assets plus liabilities equal stockholders' equity. Assets equal liabilities plus stockholders' equity.

Corporations typically do not start raising capital by issuing stock to the general public. What are the common stages of equity financing leading to an initial public offering (IPO)?

Earnings per share (EPS)

An S Corporation allows a company to enjoy limited liability as a corporation, but tax treatment as a partnership.

Treasury stock is the repurchase of a company's own issued stock.

Paid-in Capital is the amount stockholders have invested in the company.

Retained Earnings is the amount stockholders have invested in the company. Paid-in capital is the amount stockholders have invested in the company.

Tropical Rainwear issues 1,000 shares of its $20 par value preferred stock for cash at $22 per share. Record the issuance of the preferred shares.

Court Casuals has the following beginning balances in its stockholders' equity accounts on January 1, 2012: Common Stock, $100,000; Additional Paid-in Capital, $4,100,000; and Retained Earnings, $3,000,000. Net income for the year ended December 31, 2012, is $800,000. Court Casuals has the following transactions affecting stockholders' equity in 2012:

Large stock dividends and stock splits are issued primarily to:

Which of the following stages of equity financing comes last in the traditional order of progression?