ch. 15
A stock split reduces retained earnings.
False
Large stock dividends are valued at the market price per share of stock at the date of declaration.
False
Preferred shares are generally voting and pay a fixed dividend.
False
Retained earnings are amounts invested by the equity holders of the company.
False
Backdoor Inc. had 200,000 shares of $5 par common stock outstanding. The company declared a stock dividend of 100,000 shares when the market price was $25. By how much did additional paid-in capital increase when the dividend was distributed to the shareholders?
0
Illusions, Inc. reacquired 17,000 shares of its common stock for $16 per share on June 1. On July 1 they sold 5,000 treasury shares for $23 per share. On August 1 they sold 6,000 treasury shares for $12 per share. Assuming no prior balance in the Additional Paid−in Capital from Treasury Stock Transactions account, what is the ending balance in this account following these transactions?
11,000 credit balance
On January 1, Year 1, Black Dog Corp. began operations and issued 30,000 shares of $5 par common stock for $9 per share. On June 30, the company bought back 10,000 shares for $8 per share. Then, on September 15, the company resold 5,000 shares for $12 per share. What amount of total additional paid-in capital should Black Dog report on its December 31, Year 1 balance sheet if Black Dog uses the cost method to account for its treasury stock?
140,000
Price Co. reported net income of $18,000 for the current year. It had unrealized losses on available−for−sale debt securities of $1,700 after tax, and a foreign currency translation loss of $1,000 after tax. What is comprehensive income for the current year?
15,300
Mozart & Company paid cash dividends totaling $170,000 in 2016 and $75,000 in 2017. In 2018, the company will pay cash dividends of $810,000. There were no dividends in arrears as of January 1, 2016. There are 25,000 shares of common stock outstanding and 100,000 shares of 6 percent, $50 par cumulative preferred stock outstanding. What is the amount of cash dividends payable to common stockholders in 2018?
155,000
Hawks, Inc. has 79,000 shares authorized, 50,000 shares issued, and 13,000 shares of treasury stock. ________ shares are outstanding, and ________ shares are unissued.
27,000 ; 29,000
Classic Cars Corp. has 50,000 shares of $10 par common stock and 20,000 shares of $15 par fully participating 10% cumulative preferred stock. If the company declares cash dividends of $100,000 during the current year and there are no dividends in arrears, what will be the total dividend payment to preferred shareholders?
37,500
Boone Corporation's outstanding capital stock on December 15 consisted of the following: bullet• 30,000 shares of 5% cumulative preferred stock, par value $10 per share, fully participating as to dividends. No dividends were in arrears. bullet• 200,000 shares of common stock, par value $1 per share. On December 15, Boone declared dividends of $100,000. What was the amount of dividends payable to Boone's common stockholders?
40,000
Betta Corp. has 70,000 shares of $3 par common stock and 25,000 shares of $17 par 7% cumulative preferred stock. The company declares cash dividends of $80,000 during the current year and there are $9,000 dividends in arrears. What will be the total dividend payment to common stockholders?
41,250
Backdoor Inc. had 200,000 shares of $5 par common stock outstanding. The company declared a stock dividend of 30,000 shares when the market price was $25. By how much did additional paid-in capital increase when the dividend was declared?
600,000
Caesar Company issued 2 comma 4002,400 shares of its $3 par value common stock for $12 per share. They will record ________ in the common stock account at par value and ________ as additional paidminus−in capital in excess of parminus−common.
7,200;21,600
On January 1, 2016, Warhol Company issued 2,500 shares of 10%, $150 par value, cumulative preferred stock for $475,000. No preferred dividends were declared in 2016 and 2017. On December 30, 2018, the Board declared $9,000 in dividends. How much of the dividend is allocated to preferred and common shareholders?
9,000 preferred 0 common
Danio Fisheries issued 490 comma 000490,000 shares of $3 par value stock. On August 1, Danio Fisheries implements a two−for−one stock split. After the stock split, the total number of shares outstanding is ________ and the total par value is ________.
980,000 ; 1,470,000
____ preferred shares are shares for which the issuing entity has the right to buy back the shares at a specified price and future date.
Callable
S & C Company issues 2,000 shares of common stock with a $4 par value. The issue price of the stock is $16 per share. What is the journal entry required to record the issuance of the shares?
Cash 32,000 Common Stock -$4 par 8,000 Addl. Paid−in Capital in Excess of- Common 24,000
Monet's Minions, Inc. reacquired 16,000 shares of its $1 par common stock for $11 per share on August 1. On October 31 they sold 8,000 treasury shares for $6 per share. Assuming a zero balance in the Additional Paid−in Capital from Treasury Stock Transactions account, what is the necessary journal entry for the October transaction?
Cash 48,000 Retained Earnings 40,000 Treasury Stock 88,000
On January 1, 2018, TNT, Inc. issued 1,500 shares of $80 par value, convertible preferred shares for $200,000. Each preferred share is convertible into one share of $10 par common stock. What is the necessary journal entry to record this transaction?
Cash 200,000 Convertible Preferred Stock $80 Par 120,000 Addl. Paid−in Capital in Excess of Pa Preferred 80,000
On September 1, Year 1, Royal Corp., a newly formed company, had the following stock issued and outstanding: bullet• Common stock, no par, $1 stated value, 5,000 shares originally issued for $15 per share. bullet• Preferred stock, $10 par value, 1,500 shares originally issued for $25 per share. Royal's September 1, Year 1, statement of stockholders' equity should report:
Common Stock: 5,000 Preferred Stock: 15,000 Additional: 92,500
___ preferred stock shares allow the shareholder to convert his shares to common shares at a predetermined rate or exchange ratio.
Convertible
On January 1, 2018, TNT, Inc. issued 2,100 shares of $50 par value, convertible preferred shares for $200,000. Each preferred share is convertible into one share of $10 par common stock. On August 1, 2018, all preferred shareholders converted their shares into common stock. What is the necessary journal entry to record the August 1st transaction?
Convertible Preferred Stock 105,000 Addl. Paid−in Capital in Excess of Par-Preferred 95,000 Common Stock 21,00 Add. Paid−in Capital in Excess of Par—Common 179,000
The most popular method of accounting for treasury stock is the ________ method
Cost
Stockholders' equity is also called
Net Asset
____ preferred shares contain a provision requiring that preferred shareholders share ratably in distributions with common shareholders.
Participating
At its date of incorporation, McCarty Company issued 100,000 shares of its $10 par common stock at $11 per share. During the current year, McCarty acquired 30,000 shares of its common stock at a price of $16 per share and accounted for them using the cost method. Subsequently, these shares were reissued at a price of $12 per share. There have been no other issuances or acquisitions of its own common stock. What effect does the reissuance of the stock have on the following accounts?
Retained Earning: Decrease Additional- Paid in Cap: No effect
Pollyanna & Partners reacquired 40,000 shares of its $1 par common stock for $25 per share. What is the journal entry needed to record this transaction?
Treasury Stock 1,000,000 Cash 1,000,000
Other comprehensive income includes income items that bypass the income statement.
True
The number of outstanding shares of common stock may be reduced by shares held in the treasury.
True
When treasury shares are retired, the number of shares issued is reduced.
True
On August 1, 2018, Omega Co. declared and issued a 30 percent common stock dividend. Prior to this, Omega Co. had 50,000 outstanding shares of $2 par value common stock. The market value of Omega Co.'s stock was $18 per share at the time the dividend was issued. As a result of this stock dividend, Omega Co.'s total stockholders' equity
did not change
Purrfect Paws Company issues 1,000 shares of $50 par preferred stock for $250,000. The company is not required to buy back the preferred stock. However, the preferred stock includes a redemption feature that gives the holder the option to redeem the shares for cash at specified dates. This would be classified as ________ under U.S. GAAP and ________ under IFRS.
equity ; debt
Which of the following is NOT a part of Other Comprehensive Income?
gains on the sale of equipment
Sheldon, Inc. declared a stock dividend of 100,000 shares on a date when the company's common stock was selling for $19 per share. Prior to this date, Sheldon had 100,000 outstanding shares of $1 par value common stock. As a result of this stock dividend, Sheldon's common stock will ________, the additional paidminus−in capital will ________, and the retained earnings will ________.
increase $100,000; not change; decrease $100,000