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Exam 11: Corporate Reporting and Analysis

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Question 81

Multiple Choice

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Changes in accounting estimates are:

A) Considered accounting errors.
B) Reported as prior period adjustments.
C) Accounted for with a cumulative "catch-up" adjustment.
D) Extraordinary items.
E) Accounted for in current and future periods.

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

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Question 82

Multiple Choice

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In many states,the minimum amount that stockholders must contribute to the corporation,and which is intended to protect the creditors of the corporation,is called the:

A) Par value of preferred.
B) Minimum legal capital.
C) Premium capital.
D) Stated value.
E) Working capital.

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

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Question 83

Multiple Choice

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A company issued 60 shares of $100 par value common stock for $7,000 cash.The total amount of paid-in capital in excess of par is:

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.

Beagle Company earned $90,000 in income and paid cash dividends of $7,000 to preferred shareholders during the current year.Beagle had 15,500 weighted-average shares of common stock outstanding for the year.Calculate the company's earnings per share.

Small stock dividends are recorded at par or stated value.

A corporation reported net income of $2,730,000 and paid preferred cash dividends of $120,000 during the current year.There were 600,000 weighted-average shares of common stock outstanding and the market price per common share at year-end was $58.30.Calculate the company's price-earnings ratio.

A dividend preference for preferred stock means that:

Mayan Company had net income of $132,000.The weighted-average common shares outstanding were 80,000.The company has no preferred stock.The company sold 3,000 shares before the end of the year.There were no other stock transactions.The company's earnings per share is:

A corporation had stockholders' equity on January 1 as follows: Common Stock,$1 par value,1,500,000 shares authorized,600,000 shares issued; Paid-in Capital in Excess of Par Value,Common Stock,$1,100,000; Retained Earnings,$2,300,000.Prepare journal entries to record the following transactions: $\begin{array} { | l | l | } \hline \text { Feb. 15 } & \begin{array} { l } \text { The board of directors declared a } 10 \% \text { stock dividend to stockholders of record } \\\text { on }\end{array} \\\hline & \begin{array} { l } \text { March 1, to be issued on April 15. The stock was trading at \$12 per share prior } \\\text { to the dividend. }\end{array} \\\hline \text { Mar. } 31 & \text { Sold 100,000 shares of common stock for } \$ 13 \text { per share. } \\\hline & \\\hline \text { Apr. 15 } & \text { Issued the stock dividend. } \\\hline\end{array}$

Corporations avoid many of the state regulations and controls that proprietorships and partnerships are subject to.

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:

Dividend yield is computed by dividing earnings per share by the market value per share.

Paid and declared preferred dividends are called dividends in arrears.

Prior period adjustments are reported in the:

A class of stock that can usually be issued at any price without creating a minimum legal capital deficiency is called:

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:

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

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:

Stockholders' equity consists of which of the following?