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Exam 11: Reporting and Analyzing Equity

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Question 21

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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.

F) C) and D)
G) C) and E)

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Question 22

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A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

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Question 23

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Ultimate Sportswear has $100,000 of 8% noncumulative,nonparticipating,preferred stock outstanding.Ultimate Sportswear also has $500,000 of common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

A stock dividend does not reduce a corporation's assets or its stockholders' equity.

Growth stocks generally pay large dividends on a regular basis.

A corporation issued 5,000 shares of its $1 par value common stock in exchange for land (market value $30,000) and a building (market value of $100,000) .The entry to record this transaction would be:

The journal entry to record the declaration of dividends on common stock includes a debit to either Dividends or Retained Earnings and a credit to Common Dividend Payable.

A company made an error in calculating and reporting amortization expense in Year 1.The error was discovered in Year 2.The item should be reported as a prior period adjustment:

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.

A stock split increases total stockholders' equity.

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000.The entry to record this exchange is:

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

Prior period adjustments are reported in the:

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

Common stock always carries a preference for receiving dividends over preferred stock.

The stockholders' equity section of a company's year-end balance sheet follows: The preferred stock has a call price of $51.50 per share plus dividends in arrears.Only one year of dividends is in arrears.Calculate the book value per (1)preferred share,and (2)common share.

The date the directors vote to declare and pay a dividend is called the:

If a company has no preferred stock,basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.