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Exam 10: Stockholders Equity

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Question 61

Multiple Choice

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Which of the following is the most likely to have voting rights?

A) Common Stock.
B) Preferred Stock.
C) Bonds.
D) They all have similar voting rights.

E) C) and D)
F) B) and D)

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Question 62

True/False

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A corporation has lower taxes and less paperwork relative to sole-proprietorships and partnerships.

A) True
B) False

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Question 63

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The board of directors of Capstone Inc.declared a $0.60 per share cash dividend on its $1 par common stock.On the date of declaration,there were 50,000 shares authorized,20,000 shares issued,and 5,000 shares held as treasury stock.What is the entry when the dividends are declared?

Clothing Emporium was organized on January 1,2015.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2015,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 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. What is the total stockholders' equity at the end of 2015?

If a company purchases shares of another company,it records this transaction as treasury stock.

Northwest Clothing Supply has the following transactions during the year related to stockholders' equity: January 1 Issues 3,000 shares of no-par value common stock for $20 per share. March 15 Issues 800 shares of $20 par value preferred stock for $22 per share. December 1 Declares a cash dividend of $1 per share to all stockholders of record (both common and preferred)on December 15. December 15 Date of record. December 31 Pays the cash dividend declared on December 1. Record each of these transactions.

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of the year and has the following transactions affecting stockholders' equity during the year. May 18 Issues 25,000 additional shares of $1 par value common stock for $40 per share. May 31 Repurchases 5,000 shares of treasury stock for $45 per share. July 1 Declares a cash dividend of $1 per share to all stockholders of record on July 15.Hint: Dividends are not paid on treasury stock. July 31 Pays the cash dividend declared on July 1. August 10 Reissues 2,500 shares of treasury stock purchased on May 31 for $46 per share. Record each of these transactions.

California Adventures issues 5,000 shares of 8%,$100 par value preferred stock at the beginning of 2014.All remaining shares are common stock.The company was not able to pay dividends in 2014,but plans to pay dividends of $100,000 in 2015.Assuming the preferred stock is noncumulative,how much of the $100,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2015?

Contrast the effects of a cash dividend and a stock dividend on total assets,total liabilities,and total stockholders' equity.

Outstanding common stock refers to the total number of shares:

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

Preferred stock is called preferred because it usually has two preferences over common stock.These preferences relate to:

We calculate the PE ratio as the stock price divided by earnings per share so that both stock price and earnings are expressed on a per share basis.

The ending Retained Earnings balance of Lambert Inc.increased by $1.5 million from the beginning of the year.The company's net income earned during the year is $3.5 million.What is the amount of dividends Lambert Inc.declared and paid?

South Beach Apparel issued 10,000 shares of $1 par value stock for $5 per share.What is true about the journal entry to record the issuance?

On March 31,the board of directors of Shoeboxes,Inc.declares a 100% stock dividend on its 100,000,$0.01 par,common shares.The market price of Shoeboxes common stock is $30 on March 31.Record the stock dividend.

Indicate whether each of the following transactions increases (+),decreases (−),or has no effect (NE)on total assets,total liabilities,and total stockholders' equity.

The Shoe Exchange issues 5,000 shares of its $1 par value common stock to provide funds for further expansion.If the issue price is $15 per share,what is the entry to record the issuance of the stock?

When treasury stock is purchased,what is the effect on total stockholders' equity?

The number of shares outstanding is equal to the number of shares issued minus the number of shares bought back.