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Exam 11: Reporting and Analyzing Equity

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Question 31

Multiple Choice

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Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record this dividend is:

A) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
B) Debit Retained Earnings $135,000; credit Cash $135,000.
C) Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.
D) Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
E) No entry is made until the stock is issueD.Retained earnings: 50,000 shares * 10% × $27 = $135,000

F) A) and B)
G) C) and D)

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Question 32

Multiple Choice

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A corporation issued 5,000 shares of its no par common stock having a $1 stated value per share. The issue price was $10 per share. The entry to record this transaction would be:

A) Debit Cash $50,000; credit Paid-in Capital in Excess of Par Value, Common Stock $45,000; credit Common Stock $5,000.
B) Debit Cash $50,000; credit Common Stock $50,000.
C) Debit Common Stock $50,000; credit Cash $50,000.
D) Debit Treasury Stock $50,000; credit Cash $50,000.
E) Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000.

F) B) and D)
G) A) and E)

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Question 33

Multiple Choice

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A corporation issued 5,000 shares of its $1 par value stock at $16 per share. The entry to record this transaction would be:

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

A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value non-callable preferred stock outstanding and 250,000 shares of common stock outstanding. Calculate the book value per (1) preferred share, and (2) common share.

In the current year, Jacksonville Company has discovered a material prior-period error in its calculation of income. The company had incorrectly debited an asset costing $120,000 to an expense account. The related income tax expense was $42,000. This error should be reported on the current year Statement of Retained Earnings as a(n) :

A corporation may be authorized to issue both common and preferred stock.

Book value per common share is computed by:

A company made an error in calculating and reporting amortization expense in 2016. The error was discovered in 2017. The item should be reported as a prior period adjustment:

Common shareholders always share equally with all other shareholders in dividends.

A corporation is responsible for its own acts and debts because it is considered a ____________________________________.

Slate Corporation had the following balances in its stockholders' equity accounts at December 31, 2016: The following transactions occurred during 2017: Based on the above information, prepare a statement of stockholders' equity for 2017. Use the form below.

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. The amount of dividends paid to preferred and common shareholders in 2017 is:

Stock that has been issued and is held by stockholders is ___________________ stock.

Organization expenses of a corporation often include legal fees and promoter fees.

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

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals:

_______________________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.

Explain how to compute dividend yield and discuss how it is used in analysis of a company's financial condition.

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include: