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Exam 11: Corporate Reporting and Analysis

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Question 1

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A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state.The entry to record this transaction will include:

A) A $1,800 credit to Common Stock.
B) A $300 debit to Organization Expenses.
C) A $1,300 credit to Paid-in Capital in Excess of Par Value, Common Stock.
D) A $1,800 debit to Legal Expenses.
E) A $1,800 credit to Cash.

F) B) and C)
G) A) and B)

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Question 2

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Sweet Company's outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends. $\begin{array} { c c r } & \text { Dividend Declared } \\\text { year 1 } & \$ 2,000 \\\text { year 2 } & \$ 6,000 \\\text { year 3 } & \$ 32,000\end{array}$ The total amount of dividends paid to preferred and common shareholders over the three-year period is:

A) $15,000 preferred; $25,000 common.
B) $11,000 preferred; $29,000 common.
C) $5,000 preferred; $35,000 common.
D) $12,000 preferred; $28,000 common.
E) $10,000 preferred; $30,000 common.

F) A) and E)
G) B) and E)

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Question 3

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Percy Corporation was formed on January 1.The corporate charter authorized 100,000 shares of $10 par value common stock.During the first month of operation,the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation.The entry to record this transaction would include:

Preferred stock that allows preferred stockholders to share with common stockholders any dividends paid in excess of the percent or dollar amount stated on the preferred stock is called:

A company had a beginning balance in retained earnings of $430,000.It had net income of $60,000 and paid out cash dividends of $56,250 in the current period.The ending balance in retained earnings equals:

A corporation declared and issued a 15% stock dividend on October 1.The following information was available immediately prior to the dividend: $\begin{array}{llr} \text { Retained earnings} &\$750,000\\ \text { Shares issued and outstanding } &60,000\\ \text { Market value per share} &\$15\\ \text { Par value per share } &\$5\\\end{array}$ The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

A liability for a dividend does not exist until the directors declare a dividend.

Robin Company had net income of $67,000.The company had 9,000 weighted average common shares outstanding.The basic earnings per share equal $7.44 per share.

A company paid $0.48 in cash dividends per share.Its earnings per share is $3.20 and its market price per share is $20.00.Its dividend yield equals:

A liability for dividends exists:

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?

Changes in accounting estimates are accounted for in current and future periods.

A company had the following stockholders' equity on January 1: $\begin{array}{|l|c|}\hline \text { Common Stock - \$1 par value; 1,000,000 shares authorized, }\\\text { 350,000 shares issued and outstanding}& \$ 350,000 \\\hline \text { Paid-in capital in excess of par value, common stock } & 700,000 \\\hline \text { Retained earnings } & 364,000 \\\hline\text { Total stockholders' equity }&\$1,414,000\\\hline\end{array}$ On January 10,the company declared a 40% stock dividend to stockholders of record on January 25,to be distributed January 31.The market value of the stock on January 10 prior to the dividend was $20 per share.What is the book value per common share on February 1?

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:

Avro Corporation has $875,000 in stockholders' equity and 350,000 weighted-average shares of common stock outstanding.Calculate the book value per common share.

Purchasing treasury stock reduces the corporation's assets and stockholders' equity by unequal amounts.

A stock split is the distribution of additional shares of stock to stockholders according to their percent of ownership.

The total amount of cash and other assets the corporation receives from its stockholders in exchange for common stock is called ________.

The statement of changes in stockholders' equity:

Record the following transactions of Naches Corporation in general journal form: (a)Reacquired 8,000 of its own $3 par value common stock at $20 cash per share.The stock was originally issued at $15 per share. (b)Sold 2,000 shares of the stock reacquired under part (a)at $23 cash per share. (c)Sold 3,000 shares of the stock reacquired under part (a)at $19 cash per share.