W04 Study: Chapter 11 Smart Book Part 2

Identify the formula to compute basic earnings per share.

(Net income - preferred dividends)/weighted-average common shares outstanding

The board of directors of Anchor, Inc. authorizes a $0.50 cash dividend to its 100,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will include which of the following accounts? (Check all that apply.)

-Debit to Common Dividend Payable -Credit to Cash

Crystal, Inc. has 500 shares of outstanding $10 par common stock, with a current market value of $20 per share. Earnings per share is $2.00. The price-earnings ratio is _________________

10

Visor, Inc. had net income during the period of $10,000. Preferred dividends were $2,000 and the weighted-average common shares outstanding were 500. Basic earnings per share equal $

16

Peas, Inc. has 1,000 shares of $5 par value common stock outstanding. The annual cash dividend per share was $6.00; market value per share was $30; and net income during the period was $65,000. Dividend yield equals ______%

20

__________ ______________is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

Blank 1: Retained Blank 2: Earnings

The board of directors authorizes a cash _______________ or distribution of cash to its investors.

Blank 1: dividend

When the board of directors authorizes a cash dividend to investors, there are three important dates involved—the date of declaration, date of record, and date of______________

Blank 1: payment

The board of directors of Chester, Inc. authorizes a $0.10 cash dividend to its 10,000 shares of common stock issued and outstanding. On the date of payment, a journal entry will debit which of the following accounts and for what amount?

Common Dividend Payable for $1,000.

Authorizing a cash dividend payment to investors requires three crucial dates. Identify which of the following is not a correct term to describe these dates.

Date of authorization

When a corporation declares and pays a cash dividend, there are three notable important dates. Which date does not require a formal journal entry to the financial statements?

Date of record

On March 15, the board of directors of Richmond, Inc. declare a cash dividend of $1 per share. On March 15, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a debit to the _________ account.

Retained Earnings

The account that consists of a company's cumulative net income less any losses and dividends declared since its inception is called _________.

Retained Earnings

A _________ is the distribution of cash to its owners. This is determined by the board of directors.

cash dividend

On May 25, Tyler, Inc. issues 100 shares of $10 par value preferred stock for $5,000 cash. The entry to record this transaction would include a (debit/credit) ________ to the preferred stock account in the amount of _______.

credit; $1,000

One way to help identify whether a stock is an income stock or a growth stock is to analyze its _______, by taking annual cash dividends per share divided by market value per share.

dividend yield

The amount of income earned per each share of a company's outstanding common stock is known as:

earnings per share

True or false: Growth stocks pay large amounts of cash dividends.

false

The formula to compute dividend yield takes annual cash dividends per share divided by:

market value per share

A ratio that divides market value (price) per share by earnings per share is called:

price-earnings ratio.

A statement of stockholders' equity lists balances of: (Check all that apply).

retained earnings common stock shares cash dividends net income

The _____ lists the beginning and ending balances of key equity accounts and describes the changes that occur during the period.

statement of stockholders' equity

True or false: A corporation has agreed to pay a $0.10 cash dividend on shares of common stock. On the date of record, no formal journal entry is required.

true

In the computation of basic earnings per share, a company will use the _____.

weighted-average common shares outstanding

___________ _____________-is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

Blank 1: Retained Blank 2: Earnings

On June 1, the board of directors of Dylan, Inc. declare a cash dividend of $1 per share. On June 1, there are 1,000 shares of stock issued and outstanding. The journal entry required on the date of declaration will include a (debit/credit) ________________ to the Common Dividend Payable account.

Blank 1: credit

On August 20, Max, Inc. issues 100 shares of $1 par value preferred stock for $3,000 cash. The entry to record this transaction would include a (debit/credit)________________ to the preferred stock account in the amount of $_____________-

Blank 1: credit Blank 2: 100

The price-_________________ ratio reveals market expectations.

Blank 1: earnings

The formula for the price-earnings ratio is ___________ value per share/earnings per share.

Blank 1: market