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Exam 11: Corporate Reporting and Analysis

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Question 101

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Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its 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 balance in the Treasury Stock account on August 2?

A) $5,050.
B) $2,600.
C) $100.
D) $1,200.
E) $0.

F) B) and E)
G) None of the above

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Question 102

Multiple Choice

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Which of the following is true of a stock dividend?

A) It is a liability on the balance sheet.
B) The decision to declare a stock dividend resides with the shareholders.
C) Transfers a portion of equity from retained earnings to a cash reserve account.
D) Does not affect total equity,but transfer amounts between the components of equity.
E) Reduces a corporation's assets and stockholders' equity.

F) B) and D)
G) None of the above

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Question 103

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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.

Par value of a stock refers to the:

A corporation paid a cash dividend of $0.85 per share during the current year.It had 1,550,000 common shares outstanding at year-end,its current year earnings per share was $3.45,and the stock's year-end market price was $10.63 per share.Calculate the company's dividend yield.

Companies report prior period adjustments,net of any income tax effects in the:

A stock dividend decreases the market price of the company's stock.

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

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?

Price-earnings ratio is computed by dividing annual dividends by average market value per share.

A company's board of directors votes to declare a cash dividend of $.75 per share of common stock.The company has 15,000 shares authorized,10,000 issued,and 9,500 shares outstanding.The total amount of the cash dividend is:

Common Stock Dividend Distributable is an equity account.

The total number of shares outstanding is always equal to the number of shares authorized.

Paid and declared preferred dividends are called dividends in arrears.

Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend declaration is:

The declaration of cash dividends increases retained earnings.

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.

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

Accumulation of dividends in arrears on cumulative preferred stock does not guarantee the dividends will be paid.

Mayan Company had net income of $132,000.The weighted-average common shares outstanding were 80,000.The company declared a $27,000 dividend on its noncumulative,nonparticipating preferred stock.There were no other stock transactions.The company's earnings per share is: