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Exam 11: Corporate Reporting and Analysis

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Question 91

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Fargo Company's outstanding stock consists of 400 shares of noncumulative 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 year 3 is:

A) $7,000 preferred; $25,000 common.
B) $5,000 preferred; $27,000 common.
C) $15,000 preferred; $17,000 common.
D) $32,000 preferred; $0 common.
E) $0 preferred; $32,000 common.

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

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Question 92

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Common Stock Dividend Distributable is a liability account.

A) True
B) False

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Question 93

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The number of shares a corporation's charter allows it to sell:

The amount of income earned per share of a company's outstanding common stock is known as:

The number of shares that a corporation's charter allows it to sell is the ________ stock.

Large stock dividends are recorded at par or stated value.

The statement of changes in stockholders' equity:

If a company has noncumulative preferred stock,basic earnings per share is equal to net income less preferred dividends declared divided by the number of weighted average common shares outstanding.

________ is the amount of income earned per share of a company's outstanding common stock.

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.

Given the following information about a corporation's current year activities,compute the retained earnings for the current year.

Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock.

Stockholders' equity consists of paid-in capital and retained earnings.

A company had a beginning balance in retained earnings of $400,000.It had net income of $50,000 and declared and paid cash dividends of $55,000 in the current period.The ending balance in retained earnings equals:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the payment of the cash dividend is:

Stock that was reacquired and is still held by the issuing corporation is called:

Stock is attractive to investors because stockholders are not liable for the corporation's actions and debts and because stock is easily transferred.

A corporation with $10 par common stock issues a large stock dividend.The capitalization of retained earnings is equal to:

Small stock dividends are recorded at par or stated value.

________ are corrections of material errors in prior period financial statements.