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Exam 11: Reporting and Analyzing Equity

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Question 81

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Odessa Corporation had 20,000 shares of $2 par value common stock outstanding on July 1.On that day,the board of directors declared a 10% stock dividend when the market value of each share was $9.The stock dividend is to be distributed on July 20 to stockholders of record on July 10.The entry to record the dividend declaration is:

A) Debit Retained Earnings $18,000; credit Common Stock Dividend Distributable $18,000.
B) Debit Retained Earnings $18,000; credit Common Stock Dividends Distributable $4,000; credit Paid-In Capital in Excess of Par Value,Common Stock $14,000.
C) Debit Retained Earnings $18,000; credit Common Stock $4,000; credit Paid-In Capital in Excess of Par Value,Common Stock $14,000.
D) Debit Retained Earnings $18,000; credit Common Stock $18,000.
E) No entry is made until the stock is issued.

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

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Question 82

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Parlay Corporation has 2,000,000 shares of $0.50 par value common stock outstanding.The following selected transactions related to the company's stock took place during the current year: Prepare necessary journal entries to record the events of April 15,May 1 and May 10.

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Question 83

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What are the rights generally granted to common stockholders?

Paid and declared preferred dividends are called dividends in arrears.

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ________.

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:

The amount assigned per share to stock by the corporation in its charter is the ________.

Explain where each of the following items should appear in the financial statements of a corporation: (1)The accounting department discovered that an entry was made last year to Insurance Expense instead of to Prepaid Insurance.The after-tax effect of the charge to Insurance Expense was $5,000. (2)The company grants five of its employees the option to purchase 100 shares of its $5 par value common stock at its current market price of $20 per share anytime with the next five years.None of the employees exercised the options in the current year.

________ is the amount of income earned per share of a company's outstanding common stock.

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the journal entry necessary to record the repurchase of stock on June 30?

Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows: The following selected transactions occurred during the current year: Prepare a statement of retained earnings as of December 31 of the current year.

The costs of bringing a corporation into existence,including legal fees,promoter fees,and amounts paid to obtain a charter are called:

On September 1,Ziegler Corporation had 50,000 shares of $5 par value common stock,and $1,500,000 of retained earnings.On that date,when the market price of the stock is $15 per share,the corporation issues a 2-for-1 stock split.The general journal entry to record this transaction is:

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

All of the following statements regarding stock dividends are true except:

When a corporation has only one class of stock,the stock is called:

The term restricted retained earnings refers to statutory but not contractual restrictions.

Dividend yield is computed by dividing earnings per share by the market value per share.

The group responsible for and have final authority for managing a corporation's activities is (are)the ________.

Paid-in capital is the total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.