Chpt 11 Smartbook

Keys, Inc. purchased 100 shares of its own common stock for $10 per share. The stock is now classified as Blank______ stock, a contra equity account, reported on the statement of stockholder's equity.

treasury

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

weighted-average common shares outstanding

Zinc, Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders will total Blank______.

$2,500 correct Reason: 10,000 shares x $5 x .05 = $2,500.

Identify the formula to compute basic earnings per share.

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

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

Blink, Inc. has 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $20,000 dividend, the payment to common shareholders will total $

19500

A small stock dividend is a distribution of Blank______% or less of previously outstanding shares.

25

On January 1, Lang, Inc. has 100,000 shares of stock issued and outstanding. The board of directors of Lang wants to authorize a large stock dividend. This means that they must authorize a stock dividend of at least Blank______ shares of stock.

25,001

BLANK stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized

______ stock is the number of shares that a corporation's charter allows it to sell.

Authorized

John Kim agrees to contribute equipment with a fair market value of $5,000 in exchange for 100 shares of Rio Inc.'s common stock with a par value of $1 per share. Rio will record this transaction as a credit to which of the following accounts? (Check all that apply.)

Common Stock Paid-in Capital in Excess of Par Value

Zion, Inc. declares a 10% stock dividend when there are 10,000 shares of $1 par value stock issued and outstanding and the market value is $5 per share. On the date of payment, Zion will issue the stock and record the transaction with which of the following entries? (Check all that apply.)

Credit to Common Stock for $1,000. Debit to Common Stock Dividend Distributable for $1,000.

Vanya Inc.'s charter authorizes 1,000 shares of stock at a stated value of $1 per share. Vanya sells 50 shares of stock at its initial offering for $10 per share. The journal entry to record this transaction will include which of the following entries? (Check all that apply.)

Credit to Paid-In Capital, in Excess of Stated Value for $450. Credit to Common Stock for $50. Debit to Cash for $500.

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

On June 1, the board of directors of Big, Inc. declare a 20% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction would include a (debit/credit) to Retained Earnings in the amount of $.

Debit 10000

Gomez Inc.'s charter authorizes 1,000 shares of stock at a par value of $1 per share. Gomez sells 200 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include which of the following entries?

Debit to Cash for $200. Credit to Common Stock, $1 par for $200.

Zion, Inc. declares a 10% stock dividend when there are 10,000 shares of $1 par value stock issued and outstanding and the market value is $5 per share. On the date of payment, Zion will issue the stock and record the transaction with which of the following entries? (Check all that apply.)

Debit to Common Stock Dividend Distributable for $1,000. Credit to Common Stock for $1,000.

Ivers, Inc. purchased 100 shares of its own $10 par value common stock for $20 per share. The journal entry to record this transaction would include which of the following entries?

Debit to Treasury Stock; credit to Cash.

Long, Inc. purchased 50 shares of its own $10 par value common stock for $50 per share. The journal entry to record this transaction would include a debit to the Stock account in the amount of $.

Debit-Treasury 2500

An advantage of purchasing preferred stock is that preferred shareholders are guaranteed to receive dividend payments each year.

False

identify the disadvantages of the corporate form of business. (Check all that apply.)

Government regulation Corporate taxation

Identify the advantages of the corporate form of business. (Check all that apply.)

Limited liability of stockholders Continuous life Ease of capital accumulation

Identify which of the following is not generally a right of common stockholders.

Manage operations

______ value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued at any price without the possibility of a minimum legal capital.

No-par

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include a credit to Blank______ in the amount of Blank______.

Paid-in Capital, in Excess of Par; $8,000

The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value? Multiple choice question.

Par value

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

Retained Earnings

On January 1, the board of directors of Shante, Inc. declared a 10% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction would include a debit to Blank______ in the amount of Blank______.

Retained Earnings; $5,000

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

Retained earnings

Two of the biggest disadvantages of the corporate form of business are government regulation and corporate

Taxation

Which of the following is not a reason that a corporation would issue preferred stock?

To obtain a tax advantage over corporations with no preferred stock

Corporations purchase and hold their own stock, known as treasury stock, for several reasons. Identify which of the following is not a reason that a corporation would buy treasury stock.

To reduce the market value of the common shares outstanding

Preferred stock can be issued to raise money without giving up control.

True

Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency. True false question.

True Reason: This is describing what is known as lack of mutual agency.

Stockholders have the right to at stockholders' meetings.

Vote

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

cash dividend

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

cash dividends net income retained earnings common stock shares

Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called stock.

common

When all authorized shares of stock have the same rights and characteristics, the stock is called Blank______ stock.

common

A Blank______ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.

corporation

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit) creditBlank 1Blank 1 credit , Correct Unavailable to Common Stock, $1 par for $100Blank 2Blank 2 100 , Correct Unavailable.

credit $100

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) creditBlank 1Blank 1 credit , Correct Unavailable to the preferred stock account in the amount of $100Blank 2Blank 2 100 , Correct Unavailable.

credit 100

Avery, Inc. held 100 shares of its own $10 par value common stock purchased for $15 per share. On December 1, Avery sold 10 shares at $15 per share. The journal entry to record the sale of treasury stock would include a (debit/credit) creditBlank 1Blank 1 credit , Correct Unavailable to Treasury Stock in the amount of $150Blank 2Blank 2 150 , Correct Unavailable.

credit 150

Riley Inc.'s charter authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shares of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a (debit/credit) BLANK to Common Stock, $BLANK

credit 500

Riley Inc.'s charter authorizes 1,000 shares of stock at a stated value of $10 per share. Riley issues 50 shares of stock at its initial offering for $20 per share. The journal entry to record this transaction will include a (debit/credit) creditBlank 1Blank 1 credit , Correct Unavailable to Common Stock, $500Blank 2Blank 2 500 , Correct Unavailable.

credit 500

osie Inc.'s charter authorizes 1,000 shares of stock with no par value. Josie Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) to Common Stock, for $.

credit 500

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) Blank______ to the preferred stock account in the amount of Blank______. Multiple choice question.

credit; $1,000

Cameron, Inc. held 1,000 shares of its own $10 par value common stock purchased for $20 per share. In March, Cameron sold 10 shares at $20 per share. The journal entry to record the sale of treasury stock would include a (debit/credit) Blank______ to Treasury Stock in the amount of Blank______.

credit; $200

Bing Inc.'s charter authorizes 500 shares of stock with no par value. Bing Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) Blank______ to Common Stock for Blank______.

credit; $500

On June 1, the board of directors of Big, Inc. declare a 20% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. The entry to record this transaction would include a (debit/credit) to Retained Earnings in the amount of $.

debit 10000

Dane, Inc. purchased 10 shares of its own $5 par value common stock for $20 per share. The journal entry to record this transaction would include a (debit/credit) debitBlank 1Blank 1 debit , Correct Unavailable to the Treasury Stock account in the amount of $200Blank 2Blank 2 200 , Correct Unavailable.

debit 200

On January 1, the board of directors of Zion, Inc. declare a 10% stock dividend. On this date, there were 10,000 shares of $1 par value stock issued and outstanding and the market value was $5 per share. On March 15, the date of payment, Zion issued the stock. The entry necessary on March 15 would include a (credit/debit) Blank______ to Common Stock Dividends distributable for Blank______.

debit; $1,000

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

dividend

Preferred stock usually carries a preference for dividends, meaning that:

dividends are allocated to preferred shareholders before they are issued to common shareholders

The price- ratio reveals market expectations.

earnings

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

earnings per share

A stock dividend that is greater than 25% of the previously outstanding shares of stock is considered to be a (small/large) stock dividend.

large

The Blank______ value per share is the price at which a stock is bought and sold. Multiple choice question.

market

Jordan Inc.'s charter states that there are 50,000 shares of stock authorized with a par value of $5 per share. This typically means that investors must pay a (minimum/maximum) of $5 per share to invest in the corporation.

minimum

The Blank______ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates.

par

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 .

payment

Stock that typically includes preference for receiving dividends and for distribution of corporate assets during a liquidation is called (common/preferred) _ stock.

preferred

______ has/have special rights that give it priority over other types of stock in one or more areas.

preferred

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

price-earnings ratio.

Corporations can be separated into two types. A (privately/publicly) privatelyBlank 1Blank 1 privately , Correct Unavailable held corporation does not offer its stock for public sale and usually has few stockholders. A (privately/publicly) publiclyBlank 2Blank 2 publicly , Correct Unavailable held corporation offers its stock for public sale and can have thousands of stockholders.

privately publicly

A charter application usually must be signed by the prospective stockholders called incorporaters or BLANK Then, it is filed with the appropriate state official.

promoters

Carefree, Inc. has 20,000 shares issued and outstanding. On August 1, the board authorizes a 20% stock dividend. This is considered a (large/small) stock dividend.

small

Mario, Inc. declares a 2-for-1 stock . This means that Mario will "call in" its outstanding shares and issue two shares in exchange for each old share of stock.

split

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

statement of stockholders' equity

A Blank______ dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock.

stock

The board of directors of Visor, Inc. authorize a Blank______, a distribution of additional shares of the corporation's own stock, to existing shareholders.

stock dividend

A corporation is created by obtaining a charter from: Multiple choice question.

the state government

No-par value stock is stock not assigned a value per share by the corporate charter. Its advantage is that ___________.

there is no minimum legal capital