ACCT CH 10 Stockholder's Equity

All of the following accounts are directly or indirectly affected by a large stock dividend except

Addiotnal Paid-In Capital

When a corporation issues stock to the general public for the first time, it is known as a(n)

Initial public

The retained earnings balance reported in the balance sheet typically is not affected by

Stock splits

For the current year, Fitch Company generates net income of $140,000. The company has 40,000 shares of common stock outstanding, and the stock is currently trading at $56 per share. What is the company's price-earnings ratio?

$16.00

Cole Corporation was organized on January 1, Year 1. The company was authorized to issue 100,000 shares of $1 par value common stock. During the year, the company had the following transactions relating to stockholders' equity Issued 40,000 shares of common stock at $8 per share. Reported a net income of $60,000 Paid dividends of $30,000 Purchased 5,000 shares of stock at $10 per share. What is total stockholders' equity at the end of Year 1?

$300,000

The stockholders equity section of the balance sheet includes which of the following

Additional Paid-In Capital, Common Stock, Preferred Stock, Retained Earnings, Treasury Stock

Treasury stock

decreases stockholders' equity

The shares of preferred stock issued by Saturn Corporation can be exchanged for common stock. However, any dividends in arrears are lost. Which of the following features are present in the preferred stock issued by Saturn?

Convertible, redeemable, cumulative

Jade Jewelers issued 15,000 shares of $1 par value stock for $20 per share. What is true about the journal entry to record the issuance?

Credit Common Stock $15,000

Marina, Inc., acquires 1 million shares of its own $1 par value common stock at $70 per share. It later resells the 1 million shares of treasury stock for $75. We record the $5 difference per share as a

Credit to Additional Paid-In Capital

Delta Corporation acquires 10,000 shares of its own $0.01 par value common stock at $10 per share. It later resells the 10,000 shares of treasury stock for $12. The entry to record this transaction will involve a

Credit to Additional Paid-In Capital for $20,000

The market value of Kennedy Corporation's common stock is $100 per share when it declares a 20% stock dividend on its 10,000 shares outstanding of $1 par value common stock. The entry to record this stock dividend involves a ______

Credit to Additional Paid-in Capital for $198,000

EyeCare Corporation issued 10,000 shares of 7%, $100 par value preferred stock at the beginning of Year 1. The company did not pay dividends in Year 1. However, preferred stockholders received dividends for Year 1 and Year 2, when the company declared dividends in Year 2. Preferred stockholders also have the option, under specified conditions, to return their shares for a predetermined price. Which of the following features are in present the preferred stock issued by EyeCare?

Cumulative, convertible, noncumulative

Almond Corporation acquires $10,000 shares of its own $1 par value common stock at $10 per share. The entry for this transaction includes a

Debit to Treasury Stock for $100,000

Fairfield Corporation issues 100,000 shares of $1 par value common stock for $10 per share. This transaction:

Increases assets and increases stockholders equity

Identify the primary advantages of the corporate form of business compared to a sole proprietorship or partnership

Limited liability, lower taxes, less paperwork

Earnings not distributed as dividends to stockholders is known as:

Retained earnings

Total assets, total liabilities, and total stockholders' equity do not change as the result of a large stock dividend.

True

Which of the following is the complete description of the numerator in the equation used to calculate earnings per share?

Net income minus dividend on preferred stock

All of the following are components of stockholders' equity, except _______

Notes payable

The par value of common stock represents

The legal capital per share of stock assigned when the corporation was first established.

On January 1, Year 3, Boxwood, Inc. issues 1,000 shares of $1 par value common stock for $30 per share. Later that year, the company issues 1,000 shares of $10 par value preferred stock for $80 per share. The company's balance sheet as of December 31, Year 3, will show total paid-in capital of:

$110,000

Marine Corporation issued common stock in Year 1. It issued 10,000 shares of 10%, $100 par value noncumulative preferred stock for $110 per share at the beginning of Year 3. It did not pay any dividends in Year 3 or Year 4. In December of Year 5, it declares total dividends of $250,000. How much will the common stockholders of Marine Corporation receive as dividends in Year 5?

$150,000

Issues stock refers to the number of shares

Outstanding plus treasury shares

Clary Corporation reports dividends per share of $1.20 and net income for the year of $120,000. The current stock price is $48.00. What is the company's dividend yield?

2.5%

A small stock dividend encompasses less than _______ of the outstanding stock

25%

Innovative Media issues 1,000 shares of 8%, $50 par value preferred stock for $60 per share. Which of the following will be recorded at the time of the issue?

A credit to Additional Paid-in Capital for $10,000

A corporation's officers are appointed by the

Board of directors

On January 1, Year 1, Davidson Corporation issues 1,000 shares of $1 par value common stock for $20 per share. Complete the necessary journal entry for the issuance of common stock by indicating the relevant account names and dollar amounts below. If more than one account title is debited or credited, enter the account titles in their alphabetical order.

Cash $20,000; Common Stock $1,000; Additional paid-in capital $19,000

In terms of total sales, assets, and earnings, the dominant form of business organization is a...

Corporation

A feature common to both stock splits and stock dividends is

that there is no effect on total stockholders' equity

Identify the primary disadvantages of the corporate form of business compared to a sole proprietorship or partnership

Double taxation, personal liability, more paperwork

Lego, Inc., issued common stock in Year 1. It issued 10,000 shares of 8%, $100 par value cumulative preferred stock for $110 per share at the beginning of Year 4. It did not pay any dividends during Year 4. In December of Year 5, it declares total dividends of $200,000. How much will the preferred stockholders of Lego receive as dividends in Year 5?

$60,000

On the date of declaration of the dividend, we

Debit Dividends

When a corporation acquired shares of its own commons stock, it records as

Debit to Treasury for cost

Which of the following dates associate with dividends does not require an entry to be recorded?

Record date

What is the net affect of the dividend declaration and payment?

Reduction in both stockholders equity and assets

The stock dividends account is a temporary stockholders equity account that is closed into

Retained earnings

Return on equity measures

The amount of income generated for each $1 of stockholders' equity

Why do most companies report stock split in the same way as a large stock dividend?

To avoid changing par value per share