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Exam 13: The Corporate Income Statement and the Statement of Stockholders Equity

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Question 71

True/False

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A stock dividend will cause an increase in total contributed capital at the date the dividend is declared.

A) True
B) False

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Question 72

Multiple Choice

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Which of the following would be involved in the computation of earnings per share for a company with a simple capital structure?

A) Stock options
B) Number of shares of nonconvertible preferred stock
C) Dividends declared on nonconvertible preferred stock
D) Dividends declared on common stock

E) A) and B)
F) C) and D)

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Question 73

Multiple Choice

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A company had the following amounts of common stock outstanding: 9,000 shares from January through April,15,000 shares from May through October,and 25,000 shares from November through December.What is the weighted-average number of shares rounded to nearest dollar used in earnings per share calculations?

Net income does not include

Which of the following statements is not true about a 2-for-1 stock split?

Diluted earnings per share should be a more conservative (lower)figure than basic earnings per share.

The write-down of an asset will affect

Investments by owners are contained in comprehensive income.

A small stock dividend should be recorded on the basis of

On the income statement,all income taxes should be centralized in the Income Taxes Expense account.

A small stock dividend normally results in a transfer from Retained Earnings to Contributed Capital of an amount equal to the par value of the stock.

Income taxes expense represents the amount of income taxes

A business with a simple capital structure would present only basic earnings per share information in its financial statements.

Shank Corporation uses a different depreciation method for its income tax return than it does for its income statement.Consequently,the corporation has a credit balance in its Deferred Income Taxes account.This balance should be classified as a

Distinguish between cash and retained earnings.

The discrepancy between methods used for accounting purposes and methods used for tax purposes causes items in the financial statements to be shown "net of tax."

The following facts pertain to the stockholders' equity section of the balance sheet of Vanalden Corporation: $\begin{array} { lcc } &\text { Dacembar } 31,2010 & \text { December } 31,2009 \\\text {Common Stock- \$ 5 par value }& \$ 55,000 & \$ 50,000 \\ \text {Additional Paid-in Capital}&32,000 & 30,000 \\ \text { Retained Earnings}&105,000 & 100,000 \end{array}$ During 2010,Vanalden declared and distributed a stock dividend.Also during 2010,Vanalden declared and paid cash dividends of $10,000.There were no changes in the number of shares of stock issued and outstanding during the period except for the change caused by the stock dividend.Calculate the amount of net income reported by Vanalden for 2010.

A business with 100,000 shares of stock outstanding for three months would use a weighted-average 25,000 shares in its earnings per share calculation.

a.Shoup Corporation has 9,000 shares of $10 par value common stock and 5,000 shares of $50 par value,10 percent cumulative preferred stock outstanding.All shares were issued at par value.In addition,retained earnings total $90,000.If the preferred stock is callable at $54 per share,and one year's dividends are in arrears,compute book value per share of preferred stock. b. Assume the same facts as in a above. Calculate book value per share of common stock. c. Assume the same facts as in a above and that Shoup Corporation declares a 5-for-1 stock split on its common stock. After the split, total par value of common stock equals what amount? d. Assume the same facts as in a above and that Shoup Corporation declares a 12 percent stock dividend on its preferred stock. If the market value on the declaration date was $70 per share, for what amount will Preferred Stock Distributable be credited?

The following facts pertain to Rojas Corporation: $\begin{array}{llr} \text { Retained Earnings balance, December 31, 2009} &\$550,000\\ \text { Cash dividends declared and paid in 2010} &60,000\\ \text { Cash dividends declared but not paid in 2010 } &20,000\\ \text { Retained Earnings balance reported on December 31,2010 , balance sheet} &675,000\\\end{array}$ On the basis of these facts,compute the amount of net income (loss)for Rojas Corporation for 2010.