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Exam 10: Stockholders Equity

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Question 41

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Project Company has 15,000 shares outstanding of $100 par value, 7% cumulative preferred stock and 75,000 shares of $20 par value common stock. The company declared cash dividends of $315,000. a. If no arrearage on the preferred stock exists, how much in total dividends and in dividends per share is paid to each class of stock? b. If one year's dividend arrearage on the preferred stock exists, how much in total dividends and in dividends per share is paid to each class of stock?

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Question 42

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The following selected list of accounts with their normal balances was taken from the general ledger of Windsor Company as of December 31: Given above information:

A) Total Contributed Capital is $1,070,000, and Total Stockholders' equity is $1,201,000
B) Total Contributed Capital is $740,000, and Total Stockholders' equity is $609,000
C) Total Contributed Capital is $905,000, and Total Stockholders' equity is $871,000
D) Total Contributed Capital is $740,000, and Total Stockholders' equity is $871,000

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Question 43

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If a company issues 10,000 shares of $2 par value common stock at a market price of $30 per share, which of the following is the correct balance sheet entry?

The document that sets forth the structure and purposes of a corporation is the:

Stockholders of a corporation have unlimited liability; that is, they are responsible separately and collectively for unsatisfied obligations of the corporation.

Property or services received in exchange for capital stock should be recorded at the par or stated value of the shares issued.

If a firm splits its common stock three for one at year-end, then the return on common stockholders' equity will be lower than what it would have been without the stock split.

Which of the following is an organizational advantage of a corporation?

Following is the stockholders' equity section of Moon Molding, Inc. at December 31: Required a. Compute the number of shares that have been issued. b. At what average issue price were the shares issued? c. At what average cost were the treasury stock purchased?

Robotics Company initially has 15,000 shares of common stock outstanding on January 1. During the year, they have the following changes in terms of shares. Calculate the number of shares it has outstanding at the end of the year (round down if partial shares).

Saddle Cross Company has preferred stock with a par value of $12 that is convertible into common stock at the ratio of 1 to 1. The common stock has a par value of $8. The following table presents the components of stockholders' equity for Saddle Cross Company: a. How many shares of common stock were sold during the year and at what price? b. How many shares of preferred stock were converted this year?

Corporations pay an income tax only on that portion of their earnings that is distributed to stockholders as dividends.

Preferred stockholders compose the basic, residual ownership class in a corporation.

Jones Company has 200,000 shares authorized, 150,000 shares issued, and 25,000 shares of Treasury stock on January 1. On March 1, they declared a 15% stock dividend. The company then declared a $0.35 per share cash dividend. What is the amount of dividends payable?

Corporations are subject to greater degrees of regulation and supervision than are proprietorships and partnerships.

Cash dividends become an obligation of the corporation on the date they are declared by the board of directors.

When a "large" stock dividend is paid out, retained earnings are reduced by the market value of the dividend.

Morris Company had the following transactions during the current year: 1: Morris Company sells 100,000 shares of its no-par common stock for $20. 2: Morris Company buys 5,000 shares of its no-par common stock for $15 per share. 3: Morris Company declares and pays a dividend on its no-par common stock of $3 per share. Indicate the effect (increase, decrease, no effect) of each of these stock decisions for each year on the items listed below.

The August 1 balance sheet for Closet Door Company reported 24,000 shares of $5 par value common stock that were issued and outstanding: On August 2 the company splits its stock 2-for-1. Required: a. How many shares of common stock are issued and outstanding immediately after the stock split? b. What is the dollar balance of common stock immediately after the stock split?

Return on common stockholders' equity is computed by dividing the annual net income available to common stockholders by the average common stockholders' equity for the year.