Test 3 Review

Terpsichore Inc., has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 200,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. No dividends were paid in 2013. In 2014, $75,000 of dividends are declared and paid. If the preferred stock is nonparticipating, what are the dividends received by the preferred stockholders in 2014?

$10,000

Hise Inc., has 4,000 shares of 9%, $100 par value, cumulative preferred stock and 200,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. The board of directors declared and paid a $25,000 dividend in 2013. In 2014, $74,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2014?

$47,000

On January 1, 2014, Western Carolina Company granted Andy Eggers, an employee, an option to buy 2,000 shares of Western Carolina Co. stock for $25 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $21,000. Eggers exercised his option on September 1, 2014, and sold his 2,000 shares on December 1, 2014. Quoted market prices of Western Carolina Co. stock during 2014 were 1/1/2014 $25 per share 9/1/2014 $30 per share 12/1/2014 $34 per share The service period is for three years beginning January 1, 2014. As a result of the option granted to Eggers, using the fair value method, Western Carolina should recognize compensation expense for 2014 on its books in the amount of

$7,000

Direct costs incurred to sell stock such as underwriting costs should be accounted for as 1. a reduction of additional paid-in capital. 2. an expense of the period in which the stock is issued. 3. an intangible asset.

1. a reduction of additional paid-in capital.

On 1/1/2016, Company issues $900000 of 11%, 5 year bonds. These bonds pay interest semiannually on 7/1 and 1/1. The bonds are sold to yield 10%. Each $1,000 bond converts to 10 shares of $1 par common stock. What is the amount of discount or premium amortized on 7/1/2016?

2762.55

On 1/1/2016, Company issues $700000 of 11%, 5 year bonds. These bonds pay interest semiannually on 7/1 and 1/1. The bonds are sold to yield 10%. Each $1,000 bond converts to 10 shares of $1 par common stock, which trade at $105 per share. What is the net BV of the bonds on 12/31/2016 after adjusting entries?

722622.27

On 1/1/2016, Company issues $700,000 of 11%, 5 year bonds. These bonds pay interest semiannually on 7/1 and 1/1. The bonds are sold to yield 10%. Each $1,000 bond converts to 10 shares of $1 par common stock, which trade at $105 per share. What is the amount of the cash proceeds from the sale of the bonds?

727,027

Which earnings per share amounts are reported in a complex capital structure?

Basic and diluted EPS

Stock issued in noncash transactions should be recorded at the: I: Fair Market Value of Stock Issued II: Par Value III: Fair Market Value of the Property Received

I or III, whichever is more readily determinable

What effect does the issuance of a 2-for-1 stock split have on Retained Earnings

No effect.

Gulfport Corporation was organized in January 2014 with authorized capital of $.0001 par value common stock. On February 1, 2012, shares were issued at par for cash. On March 1, 2014, the corporation's attorney accepted 5,000 shares of common stock in settlement for legal services with a fair value of $25,250. Additional paid-in capital would increase on

ONLY ON 3/1/2014

Cash dividends are paid on the basis of the number of shares

OUTSTANDING

Jackson Corporation issued a 100% stock dividend of its common stock which had a par value of $.01, and a market value of $123 before the dividend and $62 after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

PAR-VALUE

Which of the following increases the number of shares outstanding and decreases the par value per share?

Stock Split

Duszynski Company issues 20,000 shares of its $.50 par value common stock having a market value of $25 per share and 6,000 shares of its $25 par value preferred stock having a market value of $50 per share for a lump sum of $750,000. The proceeds allocated to the common stock is

The proceeds allocated to the common stock is $ 468,750. PROPORTIONAL METHOD COMMON- 20,000 SHARES * 25 MARKET VALUE SHARE = 500,000 PREFERRED - 6,000 SHARES * 50 MARKET VALUE = 300,000 AGGREGATE FAIR VALUE = 800,000 COMMON PROPORTION= 500,000/800,000= .625 .625*LUMP SUM OF 750,000= 468,750

Presented below is information related to Kaenzig Corporation: Common Stock , $1 par $2,100,000 Paid-in Capital in Excess of Par - Common Stock 550,000 Preferred 8 ½% Stock, $50 par 1,700,000 Paid-in Capital in Excess of Par—Preferred Stock 950,000 Retained Earnings 2,350,000 Treasury Common Stock (at cost) 250,000 The total stockholders' equity of Kaenzig Corporation is

The total stockholders' equity of Kaenzig Corporation is $7,400,000. CAPITAL STOCK : 2,100,000+1,700,000 = 3,800,000 PAID - IN CAPITAL: 550,000+950,000=1,500,000 TOTAL PAID IN: 3,800,000+1,500,000=5,300,000 TOTAL PAID IN AND RETAINED EARNINGS: 5,300,000+2,350,000=7,650,000 LESS: TREASURY STOCK: 7,650,000-250,000=7,400,000

On September 14, 2014, Gayot Company reacquired 12,000 shares of its $1 par value common stock for $40 per share. Gayot uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit

Treasury Stock for $480,000

When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?

Treasury stock for the purchase price.

Compensation expense resulting from a compensatory stock option plan is generally

allocated to the periods benefited by the employee's required service

Convertible bonds are usually converted into:

common stock

What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?

decrease; increase The acquisition of treasury stock will reduce stockholders' equity (R/E LESS TREASURY STOCK ON STATMENT) and increase earnings per share (Fewer SHARES OUTSTANDING, LOWER DENOMINATOR ON EPS, HIGHER EARNINGS PER SHARE).

In January 2014, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2014, Finley Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

decreased total stockholders' equity.

Dilutive convertible securities must be used in the computation of

diluted EPS only