Accounting Chapter 11

earnings per share

(net income - preferred dividends) / average common shares outstanding

Return on common stockholders' equity

(net income - preferred dividends) / average common stockholders' equity

A corporation is authorized to sell 1,200,000 shares of common stock. Today there are 450,000 shares outstanding, and the board of directors declares a 8% stock dividend. How many shares will be issued as a stock dividend?

450,000 shares outstanding x 8% = 36,000 new shares to be issued.

Breakdown of stock

Authorized breaks down into Issued and Unissued Issued breaks down into Treasury and Outstanding

The chief accounting officer is also known as the

Controller

Desert Towers Inc. issued 2,500 shares of $6 par value common stock for $7 per share. Which of the following is included in the journal entry to record the issuance?

Debit to Cash = 2,500 x $7 = $17,500 Credit to Common stock = 2,500 x $6 = $15,000 Credit to Paid-in capital in excess of par value = 2,500 x ($7 - $6) = $2,500

Harrison, Inc. issued 4,000 shares of $10 par value preferred stock at $12 per share. which of the following will be part of the journal entry to record the issuance?

Debit to Cash = 4,000 x $12 = $48,000 Credit to Preferred Stock = 4,000 x $10 = $40,000 Credit to Paid-in capital in excess of par value = 4,000 x ($12 - $10) = $8,000

Declaration Date Entry

Debit to Cash Dividends Credit to Dividends Payable

Payment Date Entry

Debit to Dividends Payable Credit to Cash

A corporation issued 1,000 shares of its $2.00 par value common stock for $10.00 per share and later repurchased 100 of those shares for $15.00 per share. Which of the following will be recorded when the repurchase of the shares is journalized?

Debit to treasury stock for 1500 Credit to Cash for 1500

Declaration Date Record Date Payment Date Which doesn't have an entry

Record Date

How to calculate amount with dividends

Shares x Par x Percent

What do stock dividends not effect

Stockholders Equity

If 1,000 shares of $6 par common stock are reacquired by a corporation for $10 a share, by how much will total stockholders' equity change?

Stockholders' equity is reduced by the cost of acquiring the treasury stock: 1,000 shares x $10 per share = $10,000.

What do you always deduct when calculating Stockholders Equity

Treasury Stock

Which of the following represents the maximum number of shares a corporation can issue?

authorized shares

Payout Ratio

cash dividends declared on common stock/net income

With regards to dividends cumulative and non-cumulative mean

cumulative= past dividends that weren't paid must be paid Non-cumulative = The opposite

Legal capital =

number of shares issued x par price