Accounting IS 300 Quiz 11

A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend: Retained earnings $750,000 Shares issued and outstanding 60,000 Market value per share $15 Par value per share $5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

$135,000.

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $0 Year 2 $6,000 Year 3 $32,000 The amount of dividends paid to preferred and common shareholders in Year 2 is:

$6,000 preferred; $0 common.

Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $2,000 Year 2 $6,000 Year 3 $32,000 The amount of dividends paid to preferred and common shareholders in year 3 is:

$7,000 preferred; $25,000 common.

A company made an error in calculating and reporting amortization expense in Year 1. The error was discovered in Year 2. The item should be reported as a prior period adjustment:

on the Year 2 statement of retained earnings.

A company paid $0.65 in cash dividends per share. Its earnings per share is $2.65, and its market price per share is $26.75. Its dividend yield equals:

2.4%

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the reissuance of treasury stock on July 20?

Debit Cash $2,300; credit Paid-in Capital, Treasury Stock $300; credit Treasury Stock $2,000.

A corporation issued 5,300 shares of $10 par value common stock in exchange for some land with a market value of $76,000. The entry to record this exchange is:

Debit Land $76,000; credit Common Stock $53,000; credit Paid-In Capital in Excess of Par Value, Common Stock $23,000.

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record the dividend declaration is:

Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the repurchase of stock on June 30?

Debit Treasury Stock, Common $4,000; credit Cash $4,000.

A company has earnings per share of $6.50. Its dividend per share is $0.50, and its market price per share is $80. Its price-earnings ratio equals 13.

False

Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:

Noncumulative preferred stock.

A stock dividend decreases the market price of the company's stock.

True

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

True

Cumulative preferred stock carries the right to be paid both current and all prior periods' unpaid dividends before any dividends are paid to common shareholders.

True

Stated value stock is no-par stock that is assigned a "stated" value per share.

True