ACCT 2081 Chapter 11SB Homework

AnuU, Inc. sold 100,000 shares of the 1,000,000 shares it is allowed to sell. AnuU repurchased 10,000 of these shares. The number of shares issued equals ______ shares.

100,000

Vests, Inc. has 1,000 shares of 5%, par $100 preferred stock and 10,000 shares of $1 par value common stock outstanding. If the common stockholders received $2 per share in dividends, then the preferred stock dividend was ______ per share.

$5

Stockit, Inc. issued 100,000 shares of the 1,000,000 shares it is allowed to issue. Stockit has repurchased 10,000 of its own shares. The number of shares authorized equals ______ shares.

1,000,000

The account used to record the difference between the cash received and the cost of treasury stock reissued is ______.

additional paid-in capital

The declaration of a dividend results in ______. (Check all that apply.)

an increase in liabilities; a decrease in retained earnings

Cumulative preferred stock is entitled to receive current dividends plus "dividends in ________ before any future common dividends can be paid. (Enter one word per blank.)

arrears

Treasury stock is reported in the financial statements as a(n) ______.

contra equity account

The journal entry to record reissuing treasury stock at a price below the cost of the treasury stock includes a ______. (Check all that apply.)

debit to Additional paid-in capital; credit to Treasury stock; debit to Cash

A(n) IPO stands for ________ ________ offering. (Enter one word per blank.)

initial; public

The purpose of the statement of stockholders' equity is to ______.

report the changes and the sources of the changes of shareholder equity accounts

The selling of additional new shares after an IPO are referred to as ______.

seasoned offerings

An IPO ______. (Check all that apply.)

stands for initial public offering; is when a private company goes public

Diva, Inc. declared and paid $10,000 of dividends. Dividends of $10,000 may be found on the ______.

statement of stockholders' equity (retained earnings)

The date of record is the date on which the corporation ______.

finalizes its list of stockholders who will receive dividends

Preferred stockholders ______.

have the right to receive dividends only in the years the board of directors declares dividends

An increase in EPS is an indicator of ______.

higher profitability

Ownership structure can vary from one company to another, but the most basic form of corporation offers ______.

common stock

At what governmental level are corporate charters issued?

state

Which of the following are typical benefits to being a shareholder? (Check all that apply.)

voting rights; dividends; residual claim

Dilution Solutions, Inc. repurchased 1,000 shares of its $1 par value common stock for $5,000. The journal entry to record this transaction includes a $5,000 ________ to Treasury Stock. (Enter one word per blank.)

debit

The creation and oversight of all corporations are regulated by ______.

state laws

A corporation is owned by its ________. (Enter one word per blank.)

stockholders

Which of the following receive dividends if declared?

stockholders

________ have ultimate authority in a corporation and elect the members of the board of directors. (Enter one word per blank.)

stockholders

X-Co issued 1,000 shares of its 5%, $100 par value, cumulative preferred stock for $100 cash per share. The journal entry to record this event includes a ______. (Check all that apply.)

$100,000 debit to Cash; $100,000 credit to Preferred Stock

Refurbish, Inc. bought 1,000 shares of its own stock for $8,000. Later, it resold the shares for $10,000. The journal entry to record the sale of treasury stock includes a(n) ______. (Check all that apply.)

$2,000 credit to Additional paid-in capital; $8,000 credit to Treasury stock

Mega Corporation repurchased 1,000 shares of its $1 par value common stock for $8,000. The effect of this transaction on the accounting equation includes a(n) ______. (Check all that apply.)

decrease in stockholders' equity; decrease in assets

A corporation's board of directors could prefer a stock split to a stock dividend because a stock split ______.

does not reduce retained earnings, so it does not reduce the ability to declare a cash dividend in the future

Issuing 1,000 shares of 5%, $100 par value, cumulative preferred stock for $110 in cash per share affects the accounting equation by ______. (Check all that apply.)

increasing total stockholders' equity; increasing total assets; increasing Additional Paid-in Capital

After a 3-for-1 stock split, the par value of each stock is ______ the par value prior to the split.

one third

A current dividend preference requires that ______.

preferred dividends must be paid before any dividends are paid to common stockholders

Wok N Roll, Inc. began on January 1, 2017 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of $100 par value, 5%, cumulative preferred stock. No dividends were declared in 2017 or 2018. In 2019, Wok N Roll declared and paid a $0.50 dividend to its common stockholders. Assuming all shares originally issued are outstanding, the total dividend declared and paid in 2019 equals ______.

$65,000

The laws governing corporations ______.

allow a company to be incorporated in a different state from the one in which it operates

Stockit, Inc. issued 100,000 shares of the 1,000,000 shares authorized. Stockit has repurchased 10,000 of its shares. The number of shares authorized represents the ______. (Check all that apply.)

maximum number of shares Stockit is allowed to issue

Atomic, Inc. had 100,000 shares authorized, and 10,000 shares issued and outstanding of its $2 par value common stock. At December 31, Common Stock equaled $20,000 and total stockholders' equity equaled $100,000 prior to a 2-for-1 stock split. As a result of a 2-for-1 stock split, ______. (Check all that apply.)

the number of shares outstanding equals 20,000; the Common Stock equals $20,000; par value equals $1; stockholders' equity equals $100,000

Dilution Solutions, Inc. repurchased 500 shares of its $2 par value common stock for $10,000. The journal entry to record this transaction includes a ______. (Check all that apply.)

$10,000 debit to Treasury Stock; $10,000 credit to Cash

Dilution Solutions, Inc. repurchased 500 shares of its $2 par value common stock for $10,000. The effect of this transaction on the accounting equation, using the cost method, includes a ______. (Check all that apply.)

$10,000 increase in Treasury Stock; $10,000 decrease in Cash

Wyanot Company issued 1,000 shares of its 5%, $100 par value, cumulative preferred stock for $110 cash per share. The journal entry to record this transaction includes a ______. (Check all that apply.)

$100,000 credit to Preferred Stock; $110,000 debit to Cash; $10,000 credit to Additional Paid-In Capital - Preferred

Vests, Inc. has 1,000 shares of 5%, par $100, non-cumulative preferred stock and 10,000 shares of $1 par value common stock outstanding. Vests declared a $12,500 dividend. How much of the dividend is allocated to the preferred and common shares? (Check all that apply.)

$7,500 is allocated to the common stock; $5,000 is allocated to the preferred stock

Daffy Duct, Inc. issued 10,000 shares of $1 par value common stock at $10 per share. The journal entry to record this transaction includes a ______. (Check all that apply.)

$90,000 credit to Additional Paid-In Capital; $10,000 credit to Common Stock; $100,000 debit to Cash

Atomic, Inc. had 10,000 shares of $1 par value common stock outstanding prior to a 2-for-1 stock split. As a result of the stock split ______. (Check all that apply.)

20,000 shares are outstanding with a $0.50 par value

The dividend payment date is when ______.

Cash is paid to satisfy the dividend liability

The dividend payment date is when ______. (Check all that apply.)

Dividends Payable is decreased Cash is decreased

True or false: After an initial sale of stock to the public by X, Inc., when investors sell their shares in secondary markets, X's total stockholders' equity will increase.

False

When does a corporation record an increase in Dividends Payable?

On the declaration date

Select those statements below that are true about cash dividends. (Check all that apply.)

On the payment date, current assets are decreased; On the declaration date, liabilities are increased.

Stockable, Inc. began business on January 1, 2018 by issuing 100,000 shares of $1 par value common stock and 1,000 shares of 6%, noncumulative, $100 par value preferred stock. No dividends were declared in 2018. In 2019, Stockable declared and paid a $0.50 dividend to its common stockholders. Which of the following istrue?

Stockable, Inc. has no legal obligation to pay a dividend to preferred stockholders in 2018.

When a company repurchases its own securities, the stock is recorded in which account?

Treasury Stock

Treasury stock represents ______. (Check all that apply.)

a contra-equity account; the amount paid for stock reacquired and currently held in treasury

If a company's EPS falls from $5 to $3, then investors may expect ______.

a reduction in the stock price

The journal entry to record the declaration of a dividend that is to be paid at a later date includes a ______. (Check all that apply.)

debit to Retained Earnings; credit to Dividends Payable

Dividends Payable is recorded as a credit on the ______.

declaration date

A stock dividend ______. (Check all that apply.)

distributes additional shares of stock to existing stockholders on a pro rata basis; causes retained earnings to decrease

Similar to a stock split, a stock ________ also distributes additional shares of stock to existing stockholders on a pro rata basis at no cost to the stockholders. (Enter one word per blank.)

dividend

A distribution of a company's accumulated prior earnings is a(n) ______.

dividends

A corporation's board of directors is ______.

elected by its stockholders

Issuing 1,000 shares of 5%, $100 par value, cumulative preferred stock for $100 cash per share affects the accounting equation by ______. (Check all that apply.)

increasing total stockholders' equity; increasing total assets

The number of shares outstanding equals the number of shares ______.

issued minus the number of shares in treasury

Dividends payable is a(n) ________ account with a ________ balance and is initially recorded on the ________ date. (Enter one word per blank.)

liability; credit; declaration

A major advantage of the corporate form of ownership is ________ legal liability. (Enter one word per blank.)

limited

A major advantage of the corporate form of ownership is ______.

limited legal liability

A dividend date of record is the date on which the corporation ______.

makes no entry

Stock options are given to ______.

provide incentives for employees to work harder.

Stock options ______. (Check all that apply.)

provide the holder with the option to purchase stock at a specified price during a specified period of time; are often given to employees as part of their compensation

The declaration date is the date on which the corporation ______.

records its obligation to pay a dividend

Investors earn a return on stock investments by ______. (Check all that apply.)

selling the stock for more than its cost; receiving dividends

The number of shares issued represents the number of shares ______.

sold

Treasury stock is reported in the ______.

stockholders' equity section of the balance sheet

The statement of stockholders' equity reports ______.

the changes in each shareholder equity account

Seasoned offerings are ______.

the selling of additional new shares after an IPO

Refurbish, Inc. reissued 1,000 shares of its treasury stock for $10,000. Prior to the reissuance, the Treasury stock balance was $(12,000), which included the $8,000 cost of the 1,000 shares reissued. After recording this transaction, ______. (Check all that apply.)

Treasury stock will equal $(4,000); Additional paid-in capital will be increased by $2,000

Justin Corp. issues 10,000 shares of $1 par value common stock for $5 per share. The journal entry to record this transaction will include which of the following? (Check all that apply.)

Credit to Additional paid-in capital $40,000; Credit to Common stock $10,000

True or false: When a stockholder sells its stock in Optimeyes, Inc. to another investor on a secondary stock exchange at a price higher than originally paid, the stockholders' equity section of Optimeyes increases.

False

Before dividends can be paid to common stockholders, the ______ preferred stockholders must be paid ______.

cumulative; dividends in arrears

On January 1, 2017, Bank & Rupp, Inc. issued 100,000 shares of $1 par value common stock and 1,000 shares of $50 par value, 6%, cumulative preferred stock. No dividends were declared in 2017. In 2018, Bank & Rupp declared and paid a $1 dividend to its common stockholders. Assuming all shares originally issued are outstanding, the total dividend paid to the preferred stockholders equals ______.

$6,000

Treasure This, Inc. had total assets of $100,000, liabilities of $60,000 and stockholders' equity of $40,000 before repurchasing 1,000 shares of its $1 par value common stock for $5 each. After this repurchase, total assets equal _____, liabilities equal ______ and stockholders' equity equals ______.

$95,000; $60,000; $35,000