Exam 13: Accounting for Corporations

A corporation had stockholders' equity on January 1 as follows: Common Stock,$1 par value,1,500,000 shares authorized,600,000 shares issued;Paid-in Capital in Excess of Par Value,Common Stock,$1,100,000;Retained Earnings,$2,300,000.Prepare journal entries to record the following transactions:

Dividend yield is computed by dividing earnings per share by the market value per share.

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average)common stock.

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

Paid-in capital is the total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.

Retained earnings:

For each of the following independent transactions a through d,prepare the necessary journal entry: (a)Declared a $0.40 per share cash dividend on 300,000 shares of preferred stock outstanding. (b)Declared and distributed an 8% stock dividend on 800,000 shares of $5 par value common stock outstanding.Market price per common share on this date was $25. (c)Declared and distributed a 2-for-1 stock split on 400,000 shares of $10 par value common stock outstanding. (d)Declared and distributed a 35% stock dividend on 700,000 common shares of $1 par value common stock outstanding.Market price per common share on this date was $20.

A company has 500 shares of $50 par value preferred stock outstanding,and the call price of its preferred stock is $60 per share.It also has 20,000 shares of common stock outstanding,and the total value of its stockholders' equity is $680,000.The company's book value per common share equals:

A corporation may be authorized to issue both common and preferred stock.

Common stock always carries a preference for receiving dividends over preferred stock.

A liquidating dividend is:

Recording of a stock dividend results in a liability being recorded.

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

Hutter Corporation declared a $0.50 per share cash dividend on its common shares.The company has 20,000 shares authorized,9,000 shares issued,and 8,000 shares of common stock outstanding.The journal entry to record the dividend declaration is:

On September 1,Ziegler Corporation had 50,000 shares of $5 par value common stock,and $1,500,000 of retained earnings.On that date,when the market price of the stock is $15 per share,the corporation issues a 2-for-1 stock split.The general journal entry to record this transaction is:

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

_____________________ is a general term that refers to any shares issued to obtain owner financing in a corporation.

A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

A company issued 60 shares of $100 par value common stock for $7,000 cash.The total amount of paid-in capital is: