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Exam 13: Accounting for Corporations

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Question 91

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The main limitation in using book value per share for stock valuation models is the potential difference between recorded value and market value for both assets and liabilities.

A) True
B) False

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Question 92

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Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) common stock.

A) True
B) False

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Question 93

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Rhoads Corporation is authorized to issue 250,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock and 5,000,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year: Feb. 1 Issued 10,000 shares of common stock for $30 cash per share. 15 Exchanged 2,000 shares of preferred stock for equipment and merchandise inventory with market values of $80,000 and $30,000, respectively.

Treasury stock is classified as:

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.

Common Stock Dividend Distributable is a liability account.

The following data were reported by a corporation: $\begin{array}{lc}\text { Authorized shares } & 20,000 \\\text { Issued shares } & 15,000 \\\text { Treasury shares } & 3,000\end{array}$ The number of outstanding shares is:

The total number of shares outstanding is the authorized stock.

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

Common stock always carries a preference for receiving dividends over preferred stock.

A company has 50,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $1,470,000, and the par value per common share is $5. The book value per share is:

The Paid-in Capital, Treasury Stock account can never have a debit balance.

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.

A proxy is:

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

A dividend preference for preferred stock means that:

A corporation received its charter and began business this year. The company is authorized to issue 500,000 shares of $100 par, 6%, noncumulative, nonparticipating preferred stock, and 1,000,000 shares of no-par common stock. The following selected transactions occurred during this year: Mar. 5 Issued 250 shares of preferred stock for $102 cash per share. July 15 Exchanged 750 shares of common stock for $12,000 in legal services incurred in the organization of the company. Prepare journal entries to record these transactions.

A stock ________ keeps stockholder records and prepares official lists of stockholders for stockholder meetings and dividend payments.

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{lr}\text { Common stock } \$ 10 \text { par value } 20,000 \text { shares } & \$ 100,000 \\\text { authorized and } 10,000 \text { shares issued, } 9,000 \text { shares outstanding } & \\\text { Paid-in capital in excess of par value, common stock } & 50,000 \\\text { Retained earnings } & 25,000 \\\text { Treasury stock } & 11,500\end{array}$ - Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is: