Orion Chapter 11

Johanna wishes to buy stock in Old World Cola. Which of the following would be most important to her? A the par value of Old World Cola stock B the stated value of Old World Cola stock C the market price of Old World Cola stock D the historical price of Old World Cola stock

C the market price of Old World Cola stock

Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders' equity of $1,200,000. It has 200,000 shares of $2 par value common stock outstanding which is currently selling for $5 per share. If Candela Company declares a 2-for-1 stock split on its common stock, which of the following will occur?

There will be no effect on total common stockholders' equity.

The board of directors of Pilgrim Company authorizes a $100,000 restriction of retained earnings for a future plant expansion. This action will

reduce the amount of retained earnings available for dividend declarations.

Clayworks Corporation issued 300,000 shares of $5 par value common stock for $26 per share. During that year, the corporation sustained a net loss of $80,000. The year-end balance sheet would show

common stock of $1,500,000.

Stewart Soaps began business by issuing 25,000 shares of $5 par value common stock for $20 per share. During its first year, the corporation sustained a net loss of $5,000. The year-end balance sheet would show

common stock of $125,000.

The issuance of common stock affects

only the paid-in capital account.

Design Dividends on preferred stockCorporation has 400,000 shares of $10 par-value common stock issued and outstanding when the market price per share is $25 per share. By what amount will total equity increase when the company declares a 2:1 stock split?

$0

Pine Valley Lumber issues 15,000 shares of 9%, $45 par value preferred stock with a cumulative dividend feature for $65 cash per share. What is the minimum annual dividend the holders of this stock can collectively expect to receive?

$60,750

In 2015, First Inc. issued 12,000 shares of 8%, $60 par-value preferred stock with a cumulative-dividend feature. In 2015, the firm paid total dividends of $30,000, and in 2016, it paid total dividends of $45,000. If First declares $180,000 in total dividends for 2017, what amount will be available for its common stockholders?

$82,200

A-Team Corporation issued 1,000 shares of $5 par value stock for land. The stock is actively traded at $9 per share. The land was advertised for sale at $10,500. The land should be recorded at

$9,000

When a company offers a ________, the event does not require a formal journal entry on a corporation's books.

2-for-1 stock split

Taft Industries had 250,000 shares of common stock outstanding before a stock split occurred and 500,000 shares outstanding after the stock split. The stock split was

2-for-1.

Romine Industries has total stockholders' equity of $4,982,000. Given the following information, what is the company's total additional paid-in capital? Common Stock, $3 par (400,000 shares authorized, 358,000 shares issued and outstanding). Preferred Stock, 4%, $100 par (5,000 shares authorized, issued, and outstanding). Retained Earnings (ending balance): $2,619,000 This is correct answer : A $789,000 B $1,574,000 C $1,074,000 D $663,000

A $789,000

In what way is a corporation different from a sole proprietorship or partnership?

A corporation is subject to more federal and state government regulations.

Which of the following statements is true? A : Both a stock split and a stock dividend will increase the number of shares outstanding and will both increase total stockholders' equity. B : A stock split will increase the number of shares outstanding but will decrease total stockholders' equity. C : Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity. D : A stock split will increase the number of shares outstanding and will increase total stockholders' equity.

C : Both a stock split and a stock dividend will increase the number of shares outstanding but will have no effect on total stockholders' equity.

ABC Corporation issues 1,000 shares of $10 par value common stock at $12 per share. In recording the transaction, credits are made to

Common Stock $10,000 and Paid-in Capital in Excess of Par-Common Stock $2,000.

Which of the following companies has the LOWEST payout ratio? A : a company with $97 million cash dividends declared on common stock and a net income of $376 million B : a company with $28 million cash dividends declared on common stock and a net income of $142 million C : a company with $49 million cash dividends declared on common stock and a net income of $203 million D : a company with $18 million cash dividends declared on common stock and a net income of $94 million

D : a company with $18 million cash dividends declared on common stock and a net income of $94 million

Which of the following is true about corporations?

The corporation's life is stipulated in its charter.

What happens if no-par value stock does not have a stated value?

The entire proceeds from the issuance of the stock become legal capital.

On their books, Geneva Corporation has $2.7 billion in stockholders' equity. However, they only have $800 million with which to consider paying dividends. Why?

The other $1.9 billion is paid-in capital.

To find the return on common stockholders' equity, divide net income available to common stockholders by ________ stockholders' equity.

average common

When a corporation purchases treasury stock, the acquisition

decreases the company's total assets and total stockholders' equity.

One major difference between a partnership and a corporation is that

in a partnership, the acts of the owners bind the partnership, but in a corporation, the acts of the owners do not bind the partnership unless they are also an agent of the corporation.

When a company declares a stock dividend, the declaration will

increase paid-in capital.

When companies set their dividend payout, they generally aim for a rate that is

sustainable.