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Exam 13: Accounting for Corporations

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Question 51

Multiple Choice

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A company paid $0.85 in cash dividends per share. Its earnings per share is $3.50, and its market price per share is $35.50. Its dividend yield equals:

A) 21.4%.
B) 2.4%.
C) 9.9%.
D) 24.2%.
E) 2.0%.

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

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Question 52

Multiple Choice

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The statement of changes in stockholders' equity:

A) Describes changes in paid-in capital and retained earnings subcategories.
B) Does not include changes in treasury stock.
C) Is reported by very few companies.
D) Is part of the statement of retained earnings.
E) Shows only the ending balances in stockholders' equity.

F) A) and C)
G) A) and E)

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Question 53

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Treasury stock is stock that has been authorized, issued, and is outstanding.

A common statutory restriction is reported on the income statement whereas; a common contractual restriction is reported in the stockholders' equity section of the balance sheet.

A corporation is a legal entity separate from its owners.

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

What is treasury stock? What reasons might a company hold treasury stock?

A reverse stock split increases the market value per share and the par value per share of stock.

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

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

Robin Company had net income of $67,000. The company had 9,000 weighted average common shares outstanding. The basic earnings per share equal $7.44 per share.

If a corporation is authorized to issue 1,000 shares of $5 common stock, it is said to have $5,000 of stock outstanding.

Organization expenses of a corporation often include legal fees and promoter fees.

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share. The issue price was $10 per share. The entry to record this transaction would be:

Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

A stock dividend is recorded with a transfer from:

The Discount on Common Stock account reflects:

Comfort Mattresses, Inc. sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share. The entry to record this transaction would be:

Treasury stock is classified as:

A corporation received its charter and began business this year. The company is authorized to issue 500,000 shares of $100 par, 6%, noncumulative, nonparticipating preferred stock, and 1,000,000 shares of no-par common stock. The following selected transactions occurred during this year: Mar. 5 Issued 250 shares of preferred stock for $102 cash per share. July 15 Exchanged 750 shares of common stock for $12,000 in legal services incurred in the organization of the company. Prepare journal entries to record these transactions.