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Exam 11: Corporate Reporting and Analysis

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Question 61

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On September 1,Ziegler Corporation had 50,000 shares of $5 par value common stock,and $1,500,000 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) Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000.
B) Debit Retained Earnings $750,000; credit Common Stock $750,000.
C) Debit Retained Earnings $250,000; credit Common Stock $250,000.
D) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.
E) No entry is made for this transaction.

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

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Question 62

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

A) True
B) False

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Question 63

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For each of the following independent transactions a through d,prepare the necessary journal entry: (a)Declared a $0.40 per share cash dividend on 300,000 shares of preferred stock outstanding. (b)Declared and distributed an 8% stock dividend on 800,000 shares of $5 par value common stock outstanding.Market price per common share on this date was $25. (c)Declared and distributed a 2-for-1 stock split on 400,000 shares of $10 par value common stock outstanding. (d)Declared and distributed a 35% stock dividend on 700,000 common shares of $1 par value common stock outstanding.Market price per common share on this date was $20.

A company's stock is selling for $63.20 per share and its earnings per share is $3.60 for the current year.Calculate the price-earnings ratio.

Book value per common share is computed by:

Parlay Corporation has 2,000,000 shares of $0.50 par value common stock outstanding.The following selected transactions related to the company's stock took place during the current year: Prepare necessary journal entries to record the events of April 15,May 1 and May 10.

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

Growth stocks generally pay large dividends on a regular basis.

The following data has been collected about Keller Company's stockholders' equity accounts: -Assuming the treasury shares were all purchased at the same price,the number of shares of treasury stock is:

The least amount that the buyers of stock must contribute to the corporation or be at risk to pay creditors at a future date is called the:

The price-earnings ratio is computed by dividing earnings per share by the par value per share.

A company issued 70 shares of $30 par value preferred stock for $4,000 cash.The journal entry to record the issuance is:

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

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

A stock dividend is recorded with a transfer from:

On January 10,Mood Corporation purchased 15,000 shares of its own common stock at $17.50 per share.On August 4,a total of 2,000 treasury shares were sold at $19.00 per share.These are the only treasury stock transactions ever made by the corporation.Prepare the journal entries required on January 10 and August 4.

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

Calculate the balance in Paid-in Capital,Treasury Stock,on September 1 assuming its beginning-year balance is zero.

All of the following regarding accounting for Treasury Stock are true except:

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the: