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Exam 10: Stockholders Equity

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Question 41

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Diane's Designs has two classes of stock authorized: 8%,$10 par preferred and $1 par value common.The following transactions affect stockholders' equity during 2015,its first year of operations: January 1 Issue 200,000 shares of common stock for $15 per share. February 6 Issue 1,000 shares of preferred stock for $11 per share. October 10 Repurchase 10,000 shares of its own common stock for $18 per share. November 12 Reissue 5,000 shares of treasury stock at $20 per share. Record each of these transactions.

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Question 42

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Roberto Designers was organized on January 1,2015.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2015,Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8) . What is total stockholders' equity at the end of 2015?

A) $270,000.
B) $300,000.
C) $250,000.
D) $200,000.

E) A) and B)
F) All of the above

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Question 43

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Owners in a sole proprietorship or a partnership can be held personally liable for debts the company has incurred,over and beyond the investment they have made.

Explain why preferred stock often is said to have a mixture of attributes somewhere between common stock and bonds.

Small stock dividends are recorded by debiting Retained Earnings for the par value per share.

Convertible preferred stock allows the stockholder to exchange shares of preferred stock for common stock at a specified conversion ratio.

Outstanding stock is the number of shares held by investors.

When we reissue treasury stock,we report the difference between its cost and the cash received as an increase/decrease in additional paid-in capital.

If a company issues 1,000 shares of $1 par value common stock for $20 per share,what would be the effect on the accounting equation?

Issued stock refers to the number of shares:

Which of the following financing alternatives has the highest preference of payment in a case where the company liquidates its assets?

Outstanding common stock specifically refers to:

A company credits Additional Paid-in Capital for the portion of the cash proceeds above par value received for the issuance of stock.

A company issued 1,000 shares of $1 par value preferred stock for $5 per share.What is true about the journal entry to record the issuance?

Earnings per share (EPS)measures the net income earned per share of common stock outstanding.

Earnings per share is useful in comparing earnings performance across companies.

Retained Earnings:

On November 6,Coleman Corp.reacquired 1,000 shares of its $2 par value common stock for $27 each.On November 20,Coleman Corp.reissued 400 shares for $30 each.Which of the following is correct regarding the effect of the journal entry for the reissued shares?

The par value of shares issued is normally recorded in the:

We calculate earnings per share as net income divided by the average shares outstanding during the period.