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Exam 11: Corporate Reporting and Analysis

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Question 111

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The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{ll}\text {Common stock \$ 10 par value 20,000 shares }&\$100,000\\\text {authorized and 10,000 shares issued, 9,000 shares outstanding}&0\\\text { Paid-in capital in excess of par value, common stock } & 50,000 \\\text { Retained earnings } & 25,000 \\\text { Treasury stock } & 11,500\end{array}$ - Assuming the treasury shares were all purchased at the same price,the number of shares of treasury stock is:

A) 1,150.
B) 1,000.
C) 575.
D) 11,000.
E) 21,000.

F) C) and D)
G) B) and C)

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Question 112

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On August 1,a company's board of directors declared a 10% stock dividend to be distributed on September 1 to the stockholders of record on August 20.The company had 1,000,000 shares of $2.50 par value common stock outstanding with a market value of $23 per share.Prepare the journal entries required on August 1,August 20,and September 1.

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Question 113

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Rhoads Corporation is authorized to issue 250,000 shares of $50 par,10%,noncumulative,nonparticipating preferred stock and 5,000,000 shares of no-par common stock.Prepare journal entries to record the following selected transactions that occurred during this year: $\begin{array} { | l | l | } \hline \text { Feb. } 1 & \text { Issued } 10,000 \text { shares of common stock for } \$ 30 \text { cash per share. } \\\hline 15 & \begin{array} { l } \text { Exchanged } 2,000 \text { shares of preferred stock for equipment and } \\\text { merchandise inventory with market values of } \$ 80,000 \text { and } \$ 30,000 , \\\text { respectively. }\end{array} \\\hline\end{array}$

The least amount that the buyers of stock must contribute to the corporation or be subject to paying at a future date is called ________.

A company issued 60 shares of $100 par value common stock for $7,000 cash.The journal entry to record the issuance is:

The stockholders' equity section of a corporation's balance sheet follows: $\begin{array}{|l|c|}\hline \begin{array}{l}\text { Peferred stock, } \$ 25 \text { par value, } 6 \% \text {, cumulative, } 10,000 \text { shares } \\\text { authorized, } 5,000 \text { shares issued and outstanding } \ldots \ldots \ldots \ldots\end{array} & \$ 125,000 \\\hline \text { Paid-in capital in excess of par value, Preferred stock. } & 50,000 \\\hline \text {Common stock, \$ 5 par value, 50,000 shares authorized, }\\\text {20,000 shares issued and outstanding.}&100,000\\\hline \text { Paid-in capital in excess of par value, Common stock } & 40,000 \\\hline \text { Retained earnings } & 95,000 \\\hline\text { Total stockholders' equity .... }&\$410,000\\\hline\end{array}$ (1)Assuming that no dividends are in arrears,compute the book values per preferred share and per common share. (2)Assuming that one year of cumulative preferred dividends is in arrears,compute the book values per preferred share and per common share.

A company issued 60 shares of $100 par value common stock for $7,000 cash.The total amount of paid-in capital is:

A company has 50,000 shares of common stock outstanding.The stockholders' equity applicable to common shares is $1,470,000,and the par value per common share is $5.The book value per share is:

Participating preferred stock has a feature that allows its holders to share with common shareholders in any dividends paid in excess of the percent or dollar amount stated on the preferred stock.

Stocks that pay relatively large cash dividends on a regular basis are called:

Minimum legal capital requirements are intended to protect creditors.

Explain where each of the following items should appear in the financial statements of a corporation: (1)The accounting department discovered that an entry was made last year to Insurance Expense instead of to Prepaid Insurance.The after-tax effect of the charge to Insurance Expense was $5,000. (2)The company grants five of its employees the option to purchase 100 shares of its $5 par value common stock at its current market price of $20 per share anytime with the next five years.None of the employees exercised the options in the current year.

A corporation had current year net income of $237,500.It paid preferred dividends of $40,000 cash and had 480,000 weighted-average shares of common stock outstanding.Calculate the corporation's earnings per share.

The Paid-in Capital,Treasury Stock account can never have a debit balance.

A corporation paid a cash dividend of $0.85 per share during the current year.It had 1,550,000 common shares outstanding at year-end,its current year earnings per share was $3.45,and the stock's year-end market price was $10.63 per share.Calculate the company's dividend yield.

Stock not assigned a value per share by the corporate charter,allowing it to be issued at any price without the possibility of a minimum legal capital deficiency,is called ________.

Stockholders' equity consists of paid-in capital and retained earnings.

Special rights often granted to preferred stock include a preference for receiving dividends and additional voting privileges.

A corporation's minimum legal capital is established by recording the par or stated value of the number of shares:

A corporation reports the following year-end stockholders' equity: $\begin{array}{|l|c|}\hline\text {Paid-in capital:}\\\hline\text {Preferred stock, 8 \%, 100,000 shares}\\\text { authorized, 50,000 shares issued}&\$2,500,000\\\hline\text {Paid-in cavital in excess of par Preferred}&125,000\\\hline\text { Common stock, } \$ 1 \text { par, } 5,000,000 \text { shares } \\\text { authorized, } 4,000,000 \text { shares issued }& 4,000,000 \\\hline \text { Paid-in capital in excess of par, Common } & 1,200,000 \\\hline \text { Total paid-in capital } & \$ 7,825,000 \\\hline \text { Retained earnings. } & 10,675,000 \\\hline \text { Total stockholders' equity } & \$ 18,500,000 \\\hline\end{array}$ Determine the following: (1)Par value for the preferred stock. (2)Book value per share for both preferred stock and common stock assuming no dividends in arrears.