Exam 13: Equity Financing

Clayton Co. owned 30,000 common shares of Dayton Corporation purchased in 2008 for $540,000. On September 20, 2011, Clayton declared a property dividend of 1 share of Dayton for every 5 shares of Clayton stock held by a stockholder. On that date, there were 50,000 common shares of Clayton outstanding, and the market value of Dayton shares was $30 per share. The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

Which of the following is least likely to affect the retained earnings balance?

An adjustment to retained earnings as a result of a conversion of preferred stock to common stock most likely would occur when

If 40 percent of the recent dividend paid by Packers Corporation was correctly considered to be a liquidating dividend, how would this distribution affect each of the following accounts?

On February 1, authorized common stock was sold on a subscription basis at a price in excess of par value, and 20 percent of the subscription price was collected. On May 1, the remaining 80 percent of the subscription price was collected. Additional Paid-In Capital would increase on

Which of the following is not a component of comprehensive income?

When a property dividend is declared and the market value of the property exceeds its book value, the excess is credited to

The use of equity reserves under international accounting standards

The following transactions relate to the stockholders' equity transactions of Lindsay Corporation for its initial year of existence. Prepare journal entries to record the foregoing transactions. Identify the entries by letter (a - f). * Note to the instructor: Problem 2 can be shortened by eliminating the subscription of preferred shares (entries e - f).

The following information pertains to Rondo Corp. for the year ended September 30, 2011: Prepare a statement of retained earnings for Rondo Corp. for the year ended September 30, 2011.

At the date of the financial statements, common stock shares issued would exceed common stock shares outstanding as a result of the

The Gradison Corporation had the following classes of stock outstanding as of December 31, 2011: Common stock, $20 par value, 20,000 shares outstanding Preferred stock, 6 percent, $100 par value, cumulative, 2,000 shares outstanding No dividends were paid on preferred stock for 2009 and 2010. On December 31, 2011, a total cash dividend of $200,000 was declared. What are the amounts of dividends payable on both the common and preferred stock, respectively?

A company issued rights to its existing shareholders to purchase for par unissued shares of common stock with a par value of $10 per share. When the market value of the common stock was $12 per share, the rights were exercised. Common Stock should be credited at $10 per share and

Current financial accounting standards require

Ellis Company has 1,000,000 shares of common stock authorized with a par value of $3 per share of which 600,000 shares are outstanding. Ellis authorized a stock dividend when the market value was $8 per share, entitling its stockholders to one additional share for each share held. The par value of the stock was not changed. Assuming the declaration is not recorded separately, what entry, if any, should Ellis make to record distribution of the stock dividend?

Harbottle Corporation was organized on January 3, 2011, with authorized capital of 100,000 shares of $10 par common stock. During 2011, Harbottle had the following transactions affecting stockholders' equity: The cost method was used to record the treasury stock transaction. Harbottle's net income for 2011 is $300,000. What is the amount of stockholders' equity at December 31, 2011?

The exercise price and market price of stock under a fixed compensatory stock option plan are equal on the grant date. The fair value of the options is greater than the option price. Under the fair value method,

On September 20, 2011, Nozzle Corporation declared the distribution of the following dividend to its stockholders of record as of September 30, 2011: The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

Indicate how each of the following transactions would be reflected in a statement of cash flows:

On July 31, 2010, Lakers Corporation purchased 500,000 shares of Celtic Corporation. On December 31, 2011, Lakers distributed 250,000 shares of Celtic stock as a dividend to Lakers' stockholders. This is an example of a