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Exam 11: Corporate Reporting and Analysis

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Question 121

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

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Question 122

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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) $8,000 preferred; $22,000 common.
B) $16,000 preferred; $14,000 common.
C) $7,500 preferred; $22,500 common.
D) $15,000 preferred; $15,000 common.
E) $0 preferred; $30,000 common.

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Question 123

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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.

Retained earnings are part of the stockholders' claims on the company's net assets.

A large stock dividend only occurs when a distribution of more than 50% of previously outstanding shares is issued.

A company has earnings per share of $6.50.Its dividend per share is $0.50,and its market price per share is $80.Its price-earnings ratio equals 13.

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 company reported $1,050,000 in net income for the current year.Earnings per common share is $1.75 and the year-end market price of the shares is $31.50.Calculate the company's price earnings ratio.

A registrar keeps stockholder records and prepares official lists of stockholders and dividend payments.

The following selected transactions took place during the current year for a company: $\begin{array} {| l | l | } \hline \text { Feb } 25 & \text { Declared a } \$ 2.50 \text { per share cash dividend on } 20,000 \text { shares of common } \\&\text { stock outstanding }\\\hline \text { Mar. } & 20 \text { Paid the cash dividends declared on Feb. } 25 . \\\hline \text { Dec } & \text { Closed the } \$ 72,000 \text { credit balance in Income Summary that reflects net } \\31 & \text { income to Retained Earnings. }\\\hline\end{array}$ (a)Prepare the journal entries for these transactions. (b)If Retained Earnings had a $155,000 credit balance on January 1,calculate its year-end balance as of December 31.

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the journal entry necessary to record the reissuance of treasury stock on July 20?

A company was organized in January 2016 and has 20,000 shares of $10 par value,10%,nonparticipating preferred stock outstanding and 150,000 shares of $2 par value common stock outstanding.It has declared and paid cash dividends each year as shown below.Calculate the total dividends distributed to each class of stockholder under each of the assumptions given. $\begin{array} { | l | l | l | l | l | l | } \hline & & \text { Assuming Preferred } &&{ \text { Assuming Preferred } } \\\hline & & { \text { Stock } } & &{ \text { Stock } } \\\hline & \text { Cash } & \text { Is Noncumulative } && \text { Is Cumulative } & \\\hline & \text { Dividends } & & & & \\\hline & \text { Declared } & \text { Preferred } & \text { Common } & \text { Preferred } & \text { Common } \\\hline \text { Year }& \text { and Paid } & \text { Dividend } & \text { Dividend } & \text { Dividend } & \text { Dividend } \\ \hline & & & & & \\\hline & & & & & \\\hline 2016 & \$ 18,000 & & & & \\\hline 2017 & \$ 36,000 & & & & \\\hline2018 & \$ 60,000 & & & & \\\hline\end{array}$

Torino Company has 10,000 shares of $5 par value,4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding.The company paid total cash dividends of $1,000 in its first year of operation.The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

Eastline Corporation had 10,000 shares of $10 par value common stock outstanding when the board of directors declared a stock dividend of 3,000 shares.At the time of the stock dividend,the market value per share was $12.The entry to record this dividend is:

The date of record is the date that directors vote to pay a cash dividend to shareholders.

The number of shares that a corporation's charter allows it to sell is referred to as:

Cactus Joe Corporation reported stockholders' equity on January 1 of the current year as follows: Common Stock,$5 par value,1,000,000 shares authorized,600,000 shares issued; Paid-in Capital in Excess of Par Value,Common Stock,$1,025,000; Retained Earnings,$1,850,000.Prepare journal entries to record the following transactions: $\begin{array} {| l | l | } \hline \text { May } 1 & \begin{array} { l } \text { A cash dividend of } \$ 1.05 \text { per common share was declared by the board of } \\\text { directors to stockholders of record on May 20, payable June 1. }\end{array} \\\hline \text { May 20 } & \text { The date of record. } \\\hline \text { Iune } 1 & \text { Paid the cash dividend. } \\\hline\end{array}$

Large stock dividends are recorded at par or stated value.

A corporation with $10 par common stock issues a large stock dividend.The capitalization of retained earnings is equal to:

Dividing stockholders' equity applicable to common shares by the number of common shares outstanding yields the book value per common share.