Accounting Review chap 10

Dividends payable=

# of shares x distribution percentage x par value

Stock dividend value=

# shares =outstanding x market value per share x (distribiutonn percentage)

Common stock dividends=

#shares outstanding x par value x (distribution percentage)

Preferred stock is not similar to debt becuase:

(1) Preferred dividends do not have to be paid whereas interest expense must be paid (2) Preferred stock does not have a maturity date whereas debt usually has a maturity date (3) Preferred dividends are not tax-deductible whereas interest expense in tax-deductible

Bloom Corp. issued 20000 shares of common stock. Bloom purchased 6000 shares and later reissued 1000 shares. How many shares are issued and outstanding?

20000 issued and 15000 outstanding

Before a company can pay dividends to the common stockholders, the owner of cumulative preferred stock must receive _______

All dividends in arrears, but not he current years dividends

Double taxation

Corporation paying taxes on its earnings and the shareholders paying taxes on the dividends received from the corporation

Danzinng Company is authorized to issue 40000 shares of $20 par common stock. On June 30, 2016 Danzing issued 10000 shares at $40 per share. Danzing's journal entry to record these facts should include a:

Credit to Common stock for $200000 Common stock= #shares outstanding x par value

Apple Inc. issued 5 million shares of non-par common stock for 5 million. What journals entries is prepared?

Debit cash 5 million and credit common stock 5 million

The purchase of treasury stock:

Decreases total assets and decreases stockholders equity

Bond Carrying amount=

Face value-Discount Account Balance

How does the delcaration of cash dividends affect the accounting equation:

Increases to liabilties and a decrease to stockholders equity

Estimated interest expense(Discount)=

Interest Payment+Amortization

Estimated Interest expense(Premium)=

Interest Payment-Amortization

Effective-interest method:

Interest expense Interest payment

Amortization=

Interest expense-Interest payment

# of outstanding shares of stock=-

Issued stock-Treasury stock

Interest expense=

Last period carrying value * semmianual market rate

Reasons to buy treasury stock:

Need for distribution of employees Buying its stock low and selling at a higher price Avoid takeover Increasing EPS Repurchase program to return excess cash to shareholders

What is the effect of a stock dividend and stock split on total assets?

No effect

When does a cash dividend become a legal liability

On date of declaration

If a corporation issues 8000 shares of $5 par value common stock for $86000 the journal entry would include a credit to:

Paid-in Capital in Excess of par-common stock for 46000 8000 x 5=40000 , 86000-40000=46000

When a company issues a common stock at price per share greater than its par value per share, the excess should be credited to:

Paid-in capital in excess of par-common

Interest Payment=

Par value * semmiannual stated interest 9

Which of the following is not true about a 10% stock dividend?

Par value decreases

When reporting stockholders equity on the balance sheet, a corporation lists the account in the following order:

Preferred Stock, Common Stock, Additional paid-in capitals, Retained Earnings

Stockholders equity in divided into:

Retained earnings and paid-in capital

Paid-in Capital=

Stock Dividend Value-Common Stock