Orion Chapter 11

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.

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.

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.

When a corporation purchases treasury stock, the acquisition

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

The issuance of common stock affects

only the paid-in capital account.

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.

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

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.

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

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

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.

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.