Q&A Hero

Q: 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: May 1 A cash dividend of $1.10 per common share was declared by the board of directors to stockholder of record on May 20, payable June 1. May 20 The date of record. June 1 Paid the cash dividend.

Q: The following selected transactions took place during the current year for a company: March 25 Declared a $2 per share cash dividend on 20,000 shares of common Stock outstanding. April 20 Paid the cash dividends declared on March 25. Dec. 31 Closed the $52,000 credit balance in Income Summary that reflects net income to Retained Earnings. (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.

Q: On July 31, a company declared a cash dividend of $0.25 per common share to the shareholders of record on August 15. The cash dividend will be paid on August 25. This company has 500,000 shares authorized and 100,000 shares outstanding. Prepare the journal entries required on July 31, August 15, and August 25.

Q: On August 1, a corporation issued 15,000 shares of no-par common stock in exchange for a tract of land with a market value of $215,000. The common stock has a stated value of $10 per share. Prepare the general journal entry to record this transaction.

Q: A company is authorized to issue 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: Jan. 10 Sold 102,000 shares of common stock for $8 cash per share. 15 Exchanged 10,000 shares of common stock for equipment with a market value of $80,000. Feb. 1 Exchanged 500 shares of common stock for $3,000 of legal services, incurred during the companys organization.

Q: The stockholders' equity section of a corporation's balance sheet follows: Preferred stock, $25 par value, 6%, cumulative, 10,000 shares authorized, 5,000 shares issued and outstanding $125,000 Contributed capital in excess of par value, Preferred stock 50,000 Common stock, $10 par value, 50,000 shares authorized, 10,000 shares issued and outstanding 100,000 Contributed capital in excess of par value, common stock 40,000 Retained earnings 95,000 Total stockholders equity $410,000 (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.

Q: A corporation reports the following year-end stockholders' equity: Contributed capital: Preferred stock, 8%, 100,000 shares authorized, 50,000 shares issued $ 2,500,000 Contributed capital in excess of par, Preferred 125,000 Common stock, $10 par, 500,000 shares authorized, 400,000 shares issued 4,000,000 Contributed capital in excess of par, Common 1,200,000 Total contributed capital $ 7,825,000 Retained earnings 10,775,000 Total stockholders equity $18,600,000 Determine the following: (1) Par value for the preferred stock. (2) Book value per share for both preferred stock and common stock assuming a call price per share of $52 for preferred and no dividends in arrears.

Q: The stockholders' equity section of a company's year-end balance sheet follows: Preferred stock, $100 par value, 9% cumulative and nonparticipating, 5,000 shares outstanding $500,000 Contributed capital in excess of par value, preferred stock 50,000 Total capital contributed by preferred stockholders $550,000 Common stock, $5 par value, 150,000 shares outstanding $750,000 Contributed capital in excess of par value, common stock 150,000 Total capital contributed by common stockholders 900,000 Total contributed capital $1,450,000 Retained earnings 1,660,000 Total stockholders equity $3,110,000 The preferred stock has a call price of $103 per share plus dividends in arrears. One entire year's dividends are in arrears. Calculate the book value per (1) preferred share and (2) common share.

Q: A company reports the following stockholders' equity: Common stock, $10 par, 500,000 shares authorized $3,000,000 Contributed capital in excess of par, common stock 1,300,000 Total contributed capital $4,300,000 Retained earnings 1,400,000 Total stockholders equity $5,700,000 Contributed capital: Compute the (1) number of common shares outstanding and (2) book value per common share.

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

Q: A corporation has $1,750,000 in stockholders' equity and 350,000 shares of common stock outstanding. Calculate the book value per common share.

Q: 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.

Q: A company paid a cash dividend of $0.44 per share during the current year and reported 18,000 shares of common stock issued and 2,000 common shares in treasury stock during the current year. The year-end market price per share was $27.50. Calculate the following: (1) total amount of cash dividends paid to common shareholders and (2) dividend yield.

Q: A company reported earnings per share of $9.75, paid a $6.00 cash dividend per share to preferred shareholders, and paid a $0.54 cash dividend per share to common shareholders. There were 1,000 shares of preferred stock outstanding and 6,000 shares of common stock outstanding during the year and the market price per share of common stock was $45. Calculate the company's dividend yield for common stock.

Q: A corporation paid a cash dividend of $0.07 per share during the current year. It had 550,000 common shares outstanding at year-end, the current year earnings per share was $3.85 and the stock's year-end market price was $17.50 per share. Calculate the company's dividend yield.

Q: A company's stock is selling for $35 per share at year-end. This current year it paid shareholders a $2.45 per share cash dividend, reported earnings per share of $12.00, and had 750,000 common shares outstanding at year-end. Calculate the company's dividend yield.

Q: A corporation reported net income of $3,730,000 and paid preferred cash dividends of $100,000 during the current year. There were 600,000 shares of common stock outstanding and the market price per common share was $88.33 at year-end. Calculate the company's price-earnings ratio.

Q: A company reported $990,000 in net income for the current year. Total weighted-average number of common shares outstanding are equal to 150,000 shares and the year-end market price is $79.20 per common share. Calculate the company's price-earnings ratio.

Q: A company reported net income of $850,000 for the current year. The year-end market price per common share was $12 and there were 425,000 weighted-average shares of common stock outstanding. Calculate the company's price-earnings ratio.

Q: A company's stock is selling for $67.20 per share and its earnings per share is $3.50 for the current year. Calculate the price-earnings ratio.

Q: A corporation had current year net income of $2,375,000. It paid preferred dividends of $80,000 cash and had 500,000 weighted-average shares of common stock outstanding. Calculate the corporation's earnings per share.

Q: During the current year, Quark Company earned $90,000 in income and paid cash dividends of $10,000 to preferred shareholders. Quark had 12,500 weighted-average shares of common stock outstanding for the year. Calculate the company's earnings per share.

Q: Marble Corporation had the following balances in its stockholders' equity accounts at December 31, 2012: Common Stock, $10 par, 50,000 shares authorized, 20,000 shares issued $200,000 Contributed Capital in Excess of Par Value, Common 250,000 Retained Earnings 500,000 Treasury Stock, 1,000 shares (20,000) Total stockholders equity $930,000 The following transactions occurred during 2013: February 3 Sold and issued 3,000 shares of common stock for $22 per share. May 10 Declared a $0.50 per share dividend on common stock. October 12 Sold 500 shares of the treasury stock for $20 per share. December 31 Net income for the year was determined to be $75,000 Based on the above information, prepare a statement of stockholders' equity for 2013. Use the form below. MARBLE CORPORATION Statement of Stockholders Equity Common Stock Contributed Capital in Excess of Par Value, Common Retained Earnings Treasury Stock Total Balance, December 31, 2012 $200,000 $250,000 $500,000 $(20,000) $930,000 Net income Balance, December 31, 2013

Q: A corporation began the current year with $250,000 of unappropriated retained earnings. During the current year it earned $120,000 of net (after-tax) income, declared $75,000 of cash dividends, paid $50,000 of the cash dividends and purchased treasury stock costing $40,000. Calculate the current year-end balance in retained earnings.

Q: A company had stockholders' equity on January 1 as follows: Common Stock, $10 par value, 1,000,000 shares authorized, 250,000 shares issued; Contributed Capital in Excess of Par Value, Common Stock, $750,000 and Retained Earnings of $2,700,000. On May 20, $1,500,000 worth of retained earnings was appropriated for a plant expansion to be constructed next year. Prepare the journal entry to record the appropriation.

Q: Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows: Common stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued $2,500,000 Contributed capital in excess of par, common stock 1,000,000 Retained earnings 3,000,000 The following selected transactions occurred during the current year: Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 20. The stock was selling for $8 per share. Mar. 9 Paid the stock dividend. May 1 A cash dividend of $0.30 per share was declared by the board of directors to stockholders of record on May 20, payable June 1. June 1 Paid the cash dividend. Aug. 20 The board decided to split the stock 4-for-1, effective on September 1. Sept. 1 Stock split 4-for-1. Dec. 31 Earned a net income of $800,000 for the current year. Prepare a statement of retained earnings as of December 31 of the current year.

Q: A company is authorized to issue 50,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock, and 500,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year: Mar. 1 Issued 1,000 shares of common stock for $30 cash per share. 15 Exchanged 2,000 shares of preferred stock for equipment and merchandise inventory with market values of $90,000 and $20,000, respectively.

Q: A corporation received its charter and began business this year. The company is authorized to issue 50,000 shares of $100 par, 10%, noncumulative, nonparticipating preferred stock and 500,000 shares of no-par common stock. The following selected transactions occurred during this year: Apr. 5 Issued 250 shares of preferred stock for $104 cash per share June 15 Exchanged 750 shares of common stock for $15,000 in legal services incurred in the organization of the company. Prepare journal entries to record these transactions.

Q: A company is authorized to issue 50,000 shares of $50 par value, 8%, cumulative, fully participating preferred stock and 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: May 5 Exchanged 2,000 shares of preferred stock for a building with a market value of $135,000. July 20 Sold 1,550 shares of preferred stock for $50 cash per share. Dec. 20 Sold 1,000 shares of preferred stock at $55 cash per share.

Q: What is treasury stock? How is the purchase and sale of treasury stock recorded?

Q: What is the effect of dividend preferences on preferred stock? Explain how a dividend is distributed in the case of cumulative preferred stock with dividends in arrears.

Q: Explain the difference between a large stock dividend and a small stock dividend. In addition, explain how to record these two types of stock dividends.

Q: What is a stock split? How is a stock split different from a stock dividend?

Q: What journal entries are recorded for cash dividends on the declaration date, the date of record, and the payment date?

Q: Explain the preparation of journal entries to record the issuance of par value, stated value, and no-par value common stock.

Q: Explain how to compute book value per share and discuss how it can be used to analyze the financial condition of a corporation.

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

Q: Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

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

Q: Explain the components of the statement retained earnings and identify the special items that are reported in it.

Q: Identify and discuss the key differences between common and preferred stock.

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

Q: To what does Andrew Mason, the founder of Groupon, attribute his success?

Q: What is a corporation? Identify the key advantages and disadvantages of corporations.

Q: Match each of the following terms with the appropriate definitions:. 1. The amount that must be paid to call and retire a preferred share. Cumulative preferred stock 2. The earning of a higher return on common stock by paying dividends on preferred stock or interest on debt at a rate that is less than the rate of return earned with the assets from issuing preferred stock or debt. Par value 3. The price at which stock is bought or sold in the market. Premium on stock 4. The difference between the par value of stock and its issue price when it is issued at a price above par value. Book value per common share 5. No-par stock to which the directors assign a stated value per share; this amount becomes the minimum legal capital. Financial leverage 6. A preferred stock that has the right to be paid both the current and all prior periods' unpaid dividend before any dividend is paid to common stockholders. Call price 7. The equity of a corporation. Market value 8. The value assigned to a share of stock by the corporate charter when the stock is authorized. Stockholders' equity 9. Stock that gives its owners a priority status over common stockholders in one or more ways, such as the payment of dividends or the distribution of assets. Preferred stock 10. Stockholders equity applicable to common shares divided by the number of common shares outstanding. Stated value stock

Q: Match each of the following terms with the appropriate definitions: 1. An amount assigned per share by the corporation in its charter. Stock split 2. A corporation's distribution of its own stock to its stockholders without the receipt of any payment. No-par value stock 3. The number of shares of stock that a corporation's charter allows it to sell. Stock dividend 4. Preferred stock that gives the issuing corporation the right to purchase or retire it at specified future prices and dates. Authorized stock 5. The costs of bringing a corporation into existence that include legal fees, promoters' fees, and amounts paid to obtain a charter. Common stock 6. The distribution of additional shares of stock to stockholders according to their present ownership. Preemptive right 7. The right of common stockholders to maintain their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of stock issued. Par value 8. A class of stock that has not been assigned a par value by the corporate charter. Callable preferred stock 9. Preferred stock giving the holder the option of exchanging it for common stock at a specified rate. Convertible preferred stock 10. The basic stock of a corporation that usually carries voting rights for controlling the corporation. Organization costs

Q: A newly formed company sold stock for $545,000. The shares had a par value of $5 each. After the transaction, the Paid-In Capital in Excess of Par, Common Stock, account had a balance of $215,000. How many shares did the company sell? A. 62,000 B. 152,000 C. 43,000 D. 109,000 E. 66,000

Q: Victory Corporation issues 17,000 shares of its $2 par value common stock for $152,025 cash on February 20. What is the appropriate journal entry to record this transaction? A. Cash 152,025 Common Stock 34,000 Paid-in Capital in Excess of Par, Common Stock 118,025 B. Common Stock 152,025 Cash 152,025 C. Cash 152,025 Common Stock 34,000 Retained Earnings 118,025 D. Cash 152,025 Common Stock 152,025 E. Cash 118,025 Paid-In Capital in Excess of Par, Common Stock 34,000 Common Stock 152,025

Q: Duke Corporation reports the following components of stockholders equity on December 31, 2013: Common stock$25 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $1,125,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders equity $1,645,000 In 2014, 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. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. Mar. 3 Sold 1,000 shares of treasury stock for $28 per share. May 25 Sold 1,000 shares of treasury stock for $16 per share. June 15 Directors declared a $1.50 per share cash dividend payable on July 15 to the June 30 stockholders of record. July 15 Paid the dividend declared on June 15. What is the amount in the Retained Earnings account immediately after the dividend on July 15? A. $264,750 B. $392,500 C. $460,000 D. $338,500 E. $470,000

Q: Duke Corporation reports the following components of stockholders equity on December 31, 2013: Common stock$25 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $1,125,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders equity $1,645,000 In 2014, 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. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. Mar. 3 Sold 1,000 shares of treasury stock for $28 per share. May 25 Sold 1,000 shares of treasury stock for $16 per share. What is the amount in the Retained Earnings account immediately after the May 25 sale? A. $460,000 B. $328,500 C. $444,000 D. $433,000 E. $338,500

Q: Duke Corporation reports the following components of stockholders equity on December 31, 2013: Common stock$25 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $1,125,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders equity $1,645,000 In 2014, 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 February 28 to the February 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. Mar. 3 Sold 1,000 shares of treasury stock for $28 per share. What is the journal entry required for the March 3 transaction? A. Cash 28,000 Treasury Stock 25,000 Paid-In Capital, Treasury Stock 3,000 B. Cash 28,000 Treasury Stock 28,000 C. Cash 28,000 Treasury Stock 27,000 Paid-In Capital, Treasury Stock 1,000 D. Cash 28,000 Common Stock 25,000 PaidIn Capital, Common Stock 3,000 E. Cash 28,000 Retained Earnings 28,000

Q: Duke Corporation reports the following components of stockholders equity on December 31, 2013: Common stock$25 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $1,125,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders equity $1,645,000 In 2014, 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. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. What is the amount of the dividend declared? A. $177,000 B. $135,000 C. $121,500 D. $326,000 E. $338,500

Q: Premiers outstanding stock consists of (a) 57,000 shares of cumulative 4.25% preferred stock with an $18 par value and (b) 75,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2013 $ 0 2014 38,000 2015 150,000 2016 175,000 What is the amount of dividends that the Common Stockholders receive for all years presented? A. $177,000 B. $188,580 C. $214,250 D. $326,000 E. $363,000

Q: A company's outstanding stock consists of (a) 17,000 shares of noncumulative 7.50% preferred stock with a $10 par value and (b) 42,500 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2013 $ 0 2014 28,000 2015 100,000 2016 198,000 What is the amount of dividends that the common stockholders receive for all years presented? A. $177,000 B. $276,000 C. $214,250 D. $326,000 E. $287,750

Q: A company's outstanding stock consists of (a) 17,000 shares of noncumulative 7.50% preferred stock with a $10 par value and (b) 42,500 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends: 2013 $ 0 2014 28,000 2015 100,000 2016 198,000 What amount of dividends will common stockholders receive in 2014? A. $26,725 B. $15,250 C. $2,500 D. $0 E. $28,000

Q: On August 31, 2013, Victory Corporation's common stock is priced at $30 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 35% stock dividend. Common stock$7 par value, 95,000 shares authorized, 38,000 shares issued and outstanding $ 266,000 Paid-in capital in excess of par value, common stock 100,000 Retained earnings 366,000 Total stockholders' equity $732,000 What is the total amount in the Paid-In Capital account immediately after the stock dividend? A. $193,100 B. $195,000 C. $366,000 D. $100,000 E. $231,000

Q: On August 31, 2013, Victory Corporation's common stock is priced at $30 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 15% stock dividend. Common stock$7 par value, 95,000 shares authorized, 38,000 shares issued and outstanding $ 266,000 Paid-in capital in excess of par value, common stock 100,000 Retained earnings 366,000 Total stockholders' equity $732,000 What is the total amount in the Paid-In Capital in Excess of Par account immediately after the stock dividend? A. $537,000 B. $195,000 C. $366,000 D. $100,000 E. $231,100

Q: On August 31, 2013, Victory Corporation's common stock is priced at $30 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 15% stock dividend. Common stock$7 par value, 95,000 shares authorized, 38,000 shares issued and outstanding $ 266,000 Paid-in capital in excess of par value, common stock 100,000 Retained earnings 366,000 Total stockholders' equity $732,000 What is the total amount in the Retained Earnings account immediately after the stock dividend? A. $537,000 B. $195,000 C. $366,000 D. $100,000 E. $0

Q: On August 31, 2013, Victory Corporation's common stock is priced at $30 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 100% stock dividend. Common stock$7 par value, 95,000 shares authorized, 38,000 shares issued and outstanding $ 266,000 Paid-in capital in excess of par value, common stock 100,000 Retained earnings 366,000 Total stockholders' equity $732,000 What is the total amount in the Retained Earnings account immediately after the stock dividend? A. $266,000 B. $532,000 C. $366,000 D. $100,000 E. $0

Q: On August 31, 2013, Victory Corporation's common stock is priced at $30 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 100% stock dividend. Common stock$7 par value, 95,000 shares authorized, 38,000 shares issued and outstanding $ 266,000 Paid-in capital in excess of par value, common stock 100,000 Retained earnings 366,000 Total stockholders' equity $732,000 What is the total amount in the Common Stock account immediately after the stock dividend? A. $266,000 B. $532,000 C. $1,140,000 D. $874,000 E. $0

Q: Prior to June 1, a company has never had any treasury stock transactions. The company repurchased 100 shares of its common stock on June 1 for $5,000. On July 1, it reissued 50 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Contributed Capital, Treasury Stock, account on August 2? A. $5,050 B. $2,600 C. $100 D. $50 E. $0

Q: The following data has been collected about a company's stockholders' equity accounts: Common stock $10 par value 20,000 shares authorized and 10,000 shares issued $100,000 Contributed capital in excess of par value, common stock 50,000 Retained earnings 25,000 Treasury stock, 1,000 shares 11,500 The treasury shares were all purchased at the same price. The cost per share of the treasury stock is: A. $1.15 B. $1.28 C. $11.50 D. $10.50 E. $10.00

Q: The following data regarding its common stock were reported by a corporation: Authorized shares 20,000 Issued shares 15,000 Treasury shares 3,000 The number of outstanding shares is: A. 12,000 B. 15,000 C. 17,000 D. 20,000 E. 23,000

Q: Treasury stock is classified as: A. An asset account. B. A contra asset account. C. A revenue account. D. A contra equity account. E. A liability account.

Q: Stock that was reacquired by the company and is still held by the issuing corporation is called: A. Capital stock B. Treasury stock C. Redeemed stock D. Preferred stock E. Callable stock

Q: A company has 200,000 shares of $1 par value common stock and 20,000 shares of 7%, $100 par, cumulative preferred stock outstanding. The balance in Retained Earnings account at the beginning of the year was $1,500,000 and one year's dividends were in arrears. Net income for the current year was $2,000,000. If the company paid a dividend of $3 per share on its common stock, what is the balance in Retained Earnings account at the end of the year? A. $3,500,000 B. $2,900,000 C. $2,760,000 D. $2,620,000 E. $620,000

Q: A company's board of directors votes to declare a total cash dividend of $25,000. The company has 2,500 shares of $1 par common stock and 400 shares of 4%, $200 par preferred stock outstanding. What is the total amount that will be paid to preferred shareholders? A. $1,000 B. $22,500 C. $400 D. $3,200 E. $25,000

Q: A company has 1,000 shares of $50 par value, 4.5% cumulative and nonparticipating preferred stock and 10,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is: A. $1,000 B. $1,250 C. $2,250 D. $3,500 E. $4,500

Q: Xtreme Sports has $100,000 par, 8% noncumulative, nonparticipating, preferred stock outstanding. Xtreme Sports also has $500,000 par common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, Xtreme Sports paid cash dividends of $30,000. This dividend should be distributed as follows: A. $8,000 preferred; $22,000 common. B. $16,000 preferred; $14,000 common. C. $7,500 preferred; $22,500 common. D. $15,000 preferred; $15,000 common. E. $0 preferred; $30,000 common.

Q: Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called: A. Cumulative preferred stock B. Callable preferred stock C. Participating preferred stock D. Convertible preferred stock E. Preferential preferred stock

Q: Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called: A. Financial leverage B. Discount on stock C. Premium on stock D. Preemptive right E. Capital gain

Q: Preferred stock that the issuing corporation at its option may retire by paying a specified amount to the preferred stockholders plus any dividends in arrears is called: A. Convertible preferred stock B. Callable preferred stock C. Premium stock D. Cumulative preferred stock E. Participating preferred stock

Q: Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is called: A. Noncumulative preferred stock B. Participating preferred stock C. Callable preferred stock D. Cumulative preferred stock E. Convertible preferred stock

Q: A corporation had 40,000 shares of $10 par value common stock outstanding on August 1. Later that day, the board of directors declared a 9% stock dividend when the market value of each share was $72. The entry to record this dividend is: A. Common Stock Dividend Distributable 259,200 Retained Earnings 259,200 B. Retained Earnings 259,200 Common Stock Dividend Distributable 259,200 C. Retained Earnings 259,200 Common Stock Dividend Distributable 36,000 Paid-In Capital in Excess of Par Value, Common Stock 223,200 D. Retained Earnings 36,000 Common Stock Dividend Distributable 36,000 E. No entry is made until the stock is issued

Q: A corporation had 20,000 shares of $10 par value common stock outstanding on January 10. Later that day the board of directors declared a 30% stock dividend when the market value of each share was $40. The entry to record this dividend is: A. Retained Earnings 60,000 Common Stock Dividend Distributable 60,000 B. Retained Earnings 60,000 Cash 60,000 C. Retained Earnings 240,000 Common Stock Dividend Distributable 60,000 Paid-In Capital in Excess of Par Value, Common Stock 180,000 D. Retained Earnings 240,000 Common Stock Dividend Distributable 240,000 E. No entry is made until the stock is issued

Q: A 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. Retained Earnings 135,000 Common Stock Dividend Distributable 135,000 B. Retained Earnings 135,000 Cash 135,000 C. Retained Earnings 135,000 Common Stock Dividend Distributable 100,000 Paid-In Capital in Excess of Par Value, Common Stock 35,000 D. Retained Earnings 100,000 Common Stock Dividend Distributable 100,000 E. No entry is made until the stock is issued

Q: A corporation declared and issued a 15% stock dividend on November 1. The following up-to-date information was available immediately prior to the dividend: Retained earnings $750,000 Shares issued and outstanding 60,000 Market value per share $15 Par value per share $5 The amount that total stockholders' equity will increase (decrease) as a result of recording this stock dividend is: A. $45,000 B. $135,000 C. $(90,000) D. $(135,000) E. $0

Q: On September 1, a corporation had 50,000 shares of $5 par value common stock and $1,000,000 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: A. Retained Earnings 750,000 Common Stock Split Distributable 750,000 B. Retained Earnings 750,000 Common Stock 750,000 C. Retained Earnings 250,000 Common Stock 250,000 D. Retained Earnings 250,000 Stock split payable 250,000 E. No entry is made for this transaction.

Q: A stock dividend transfers: A. Contributed capital to retained earnings. B. Retained earnings to contributed capital. C. Retained earnings to assets. D. Contributed capital to assets. E. Assets to contributed capital.

Q: A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a: A. Stock dividend B. Stock subscription C. Premium on stock D. Discount on stock E. Treasury stock