Accounting 101 A Chapter 11 Reporting and Analyzing Stockholders' Equity

$7,000

Hutchinson Company had retained earnings of $10,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?

Legal Expense 20,000 Common Stock 5,000 Paid-in Capital in Excess of Stated Value - Common 15,000

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 5,000 shares of common stock to pay its recent attorney's bill of $20,000 for legal services on a land access dispute, which of the following would be the best journal entry for Retro to record?

The dividend can be rescinded once it has been declared.

Which of the following statements regarding the date of cash dividend declaration is NOT accurate?

Government Regulation

Which one of the following would not be considered an advantage of the corporate form of organization?

Decreased by $1,050,000

A corporation purchases 30,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

Own more shares of stock

A stockholder who receives a stock dividend would

$60,000 in total

Ace Inc. has 10,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock?

Common Stock $20,000 and Paid-in Capital in Excess of Stated Value $8,000

Alt Corp. issues 2,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:

Cash 7,200 Common Stock 1,600 Paid-in Capital in Excess of Stated Value 5,600

Dawson Company issued 800 shares of no-par common stock for $7,200. Which of the following journal entries would be made if the stock has stated value of $2 per share?

18%

Ferman Corporation had net income of $200,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2012. Ferman Corporation's common stockholders' equity at the beginning and end of 2012 was $870,000 and $1,130,000, respectively. Ferman Corporation's return on common stockholders' equity was

2-for-1

Green, Inc. had 200,000 shares of common stock outstanding before a stock split occurred and 400,000 shares outstanding after the stock split. The stock split was

Total Assets: No change Total Liability: Increase Total Stockholders' Equity: Decrease

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Cash 10,200 Common Stock - No-Par Value 10,200

Johnson Company issued 600 shares of no-par common stock for $10,200. Which of the following journal entries would be made if the stock has no stated value?

Preferred Stock for $2,000,000 and Paid-in Capital in Excess of Par Value - Preferred Stock for $400,000

Logan Corporation issues 40,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $2,400,000 and a credit or credits to

$3,000

Outstanding stock of the West Corporation included 20,000 shares of $5 par common stock and 5,000 shares of 6%, $10 par non-cumulative preferred stock. In 2011, West declared and paid dividends of $2,000. In 2012, West declared and paid dividends of $6,000. How much of the 2012 dividend was distributed to preferred shareholders?

$15,000

Brewer Inc. has 3,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2012, and December 31, 2011. The board of directors declared and paid a $9,000 dividend in 2011. In 2012, $36,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2012?

$40,000

Denson, Inc. has 10,000 shares of 8%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2012. There were no dividends declared in 2011. The board of directors declares and pays a $120,000 dividend in 2012. What is the amount of dividends received by the common stockholders in 2012?

Must be paid before common stockholders can receive a dividend.

Dividends in arrears on cumulative preferred stock

Debit to Stock Dividends for $78,000

On January 1, Ripken Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The entry to record the transaction of March 17 would include a

Legal Expense 18,000 Common Stock 10,000 Paid-in Capital in Excess of Par - Common 8,000

S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $20,000 by issuing 10,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $1.80 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

Stock Splits Stock Dividends No Change Decrease

Stock Dividends and stock splits have the following effects on retain earnings:

Recorded Date

The board of directors of Bosco Company declared a cash dividend on November 15, 2012, to be paid on December 15, 2012, to stockholders owning the stock on November 30, 2012. Given these facts, the date of November 30, 2012, is referred to as the

Debit to Cash Dividends

The board of directors of Yancey Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2012. The dividend is to be paid on August 15, 2012, to stockholders of record on July 31, 2012. The correct entry to be recorded on July 15, 2012, will include a

20,000

The following data is available for BOX Corporation at December 31, 2012: Common stock, par $10 (authorized 30,000 shares) $200,000 Treasury stock (at cost $15 per share) $ 1,200 Based on the data, how many shares of common stock are issued?

19,920

The following data is available for BOX Corporation at December 31, 2012: Common stock, par $10 (authorized 30,000 shares) $200,000 Treasury stock (at cost $15 per share) $ 1,200 Based on the data, how many shares of common stock are outstanding?

$1,400

The following selected amounts are available for Thomas Company. Retained earnings (beginning) $2,000 Net loss 200 Cash dividends declared 200 Stock dividends declared 200 What is its ending Retained Earnings balance?

Total cash dividends paid by net income

The payout ratio is computed by dividing

Less preferred dividends by average common stockholders' equity.

The return on common stockholders' equity is computed by dividing net income

Common Stock of $100,000

Tomlinson Packaging Corporation began business in 2010 by issuing 20,000 shares of $5 par common stock for $8 per share and 5,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2012 balance sheet, Tomlinson Packaging would report

Contra stockholders' equity account.

Treasury Stock is a(n)

A corporation's own stock, which has been reacquired and held for future use.

Treasury stock is

Deduction from total paid-in capital and retained earnings.

Treasury stock should be reported in the financial statements of a corporation as a(n)

Common Stock Dividends Distributable is decreased.

When stock dividends are distributed

The market value of the shares

When stock is issued in exchange for a non cash asset, the value recorded for the shares issued is best determined by

2-for-1 stock split.

Which of the following events would not require a journal entry on a corporation's books?

Authorized Shares

Which of the following represents the largest number of common shares?

Purchasing treasury stock is done to eliminate hostile shareholder buyouts.

Which of the following statements about treasury stock is true?

Total contributed capital increases

Which of the following statements is NOT true about a 2-for-1 split?