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Exam 11: Corporate Reporting and Analysis

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Question 61

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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.

A) True
B) False

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Question 62

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

A) Capital stock.
B) Treasury stock.
C) Redeemed stock.
D) Preferred stock.
E) Callable stock.

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

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Question 63

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Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

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

A company reported $960,000 in net income for the current year.Total weighted-average common shares outstanding are 150,000 shares,and the year-end market price is $67.20 per common share.Calculate the company's price earnings ratio.

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

What is treasury stock? What reasons might a company hold treasury stock?

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

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?

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

A stock split increases total stockholders' equity.

A company reported the following stockholders' equity on January 1 of the current year: $\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Common stock, } \$ 10 \text { par, } 1,000,000 \text { shares } \\\text { authorized, } 250,000 \text { shares issued } \ldots \ldots \ldots \ldots \ldots \ldots \ldots\end{array} & \$ 2,500,000 \\\hline \text { Paid-in capital in excess of par, common } \ldots \ldots \ldots \ldots \ldots \ldots & 1,260,000 \\\hline \text { Retained earnings } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 1,675,000 \\\hline \text { Total stockholders' equity } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 5,435,000 \\\hline\end{array}$ Prepare journal entries for the following selected transactions related to this company's stock during the current year: $\begin{array} { | l r | l | } \hline \text { Mar. } & 1 & \text { Purchased } 10,000 \text { shares of treasury stock for } \$ 18 \text { per share. } \\\hline \text { May } & 5 & \text { Sold } 4,000 \text { shares of treasury stock for } \$ 16 \text { per share. } \\\hline \text { Oct. } & 12 & \text { Sold } 2,000 \text { shares of treasury stock for } \$ 19 \text { per share. } \\\hline\end{array}$

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.

Stated value of no-par stock is:

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

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

The Paid-in Capital,Treasury Stock account can have a zero or credit balance.

Prior period adjustments to financial statements can result from:

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000.The entry to record this transaction would include: