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Exam 15: Stockholders Equity

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Question 81

Multiple Choice

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According to the FASB, redeemable preferred stock should be

A) included with common stock.
B) included as a liability.
C) excluded from the stockholders' equity heading.
D) included as a contra item in stockholders' equity.

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Question 82

Multiple Choice

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Noncumulative preferred dividends in arrears

A) are not paid or disclosed.
B) must be paid before any other cash dividends can be distributed.
C) are disclosed as a liability until paid.
D) are paid to preferred stockholders if sufficient funds remain after payment of the current preferred dividend.

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Question 83

Multiple Choice

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Written, Inc. has outstanding 600,000 shares of $2 par common stock and 120,000 shares of no-par 8% preferred stock with a stated value of $5. The preferred stock is cumulative and nonparticipating. Dividends have been paid in every year except the past two years and the current year.Assuming that $300,000 will be distributed as a dividend in the current year, how much will the common stockholders receive?

Treasury stock.For numerous reasons, a corporation may reacquire shares of its own capital stock. When a company purchases treasury stock, it usually accounts for the stock using the cost method. InstructionsExplain how a company would account for each of the following:1. Purchase of treasury shares at a price less than par value.2. Subsequent resale of treasury shares at a price less than purchase price, but more than par value.3. Subsequent resale of treasury shares at a price greater than both purchase price and par value.4. Effect on net income.

Mann Co. has outstanding 80,000 shares of 8% preferred stock with a $10 par value and 150,000 shares of $3 par value common stock. Dividends have been paid every year except last year and the current year. If the preferred stock is cumulative and nonparticipating and $400,000 is distributed, the common stockholders will receive

Earned capital consists of additional paid-in capital and retained earnings.

The laws of some states require that corporations restrict their legal capital from distribution to stockholders.

A feature common to both stock splits and stock dividends is

Berry Corporation has 50,000 shares of $10 par common stock authorized. The following transactions took place during 2014, the first year of the corporation's existence:Sold 10,000 shares of common stock for $13.50 per share.Issued 10,000 shares of common stock in exchange for a patent valued at $150,000.At the end of the Berry's first year, total paid-in capital amounted to

On December 31, 2014, the stockholders' equity section of Arndt, Inc., was as follows: On March 31, 2015, Arndt declared a 10% stock dividend, and accordingly 900 additional shares were issued, when the fair value of the stock was $18 per share. For the three months ended March 31, 2015, Arndt sustained a net loss of $32,000. The balance of Arndt's retained earnings as of March 31, 2015, should be

Sosa Co.'s stockholders' equity at January 1, 2014 is as follows: During 2014, Sosa had the following stock transactions:Acquired 6,000 shares of its stock for $270,000.Sold 3,600 treasury shares at $50 a share.Sold the remaining treasury shares at $41 per share.No other stock transactions occurred during 2014. Assuming Sosa uses the cost method to record treasury stock transactions, the total amount of all additional paid-in capital accounts at December 31, 2014 is

Which of the following statements about property dividends is not true?

A corporation declared a dividend, a portion of which was liquidating. How would this distribution affect each of the following?

Companies should record stock issued for services or noncash property at either the fair value of the stock issued or the fair value of the consideration received, whichever is more clearly determinable.

An analysis of stockholders' equity of Hahn Corporation as of January 1, 2014, is as follows: Hahn uses the cost method of accounting for treasury stock and during 2014 entered into the following transactions:Acquired 2,500 shares of its stock for $75,000.Sold 2,000 treasury shares at $35 per share.Sold the remaining treasury shares at $20 per share.Assuming no other equity transactions occurred during 2014, what should Hahn report at December 31, 2014, as total additional paid-in capital?