Exam 15: Accounting for Stockholders Equity

Coyote Company reacquired 25,000 shares of its $1 par common stock for $15 per share on June 1. On July 1 they sold 10,000 treasury shares for $20 per share. On August 1 they sold 5,000 treasury shares for $12 per share. Prepare the necessary journal entries (omit explanations).

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Question 1

Correct Answer:

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$\begin{array} { | l | l | r | r | } \hline 6 / 1 & \text { Treasury Stock } & 375,000 & \\\hline & \text { Cash } & & 375,000 \\\hline\end{array}$ $\begin{array}{|l|l|c|c|}\hline 7 / 1 & \text { Cash } & 200,000 \\\hline & \text { Treasury stock } &&150,000 \\\hline & \text { Add. Paid-in Capital from Treasury Stock } & \\&\text { Transactions }&&50,000\\\hline\end{array}$ $\begin{array} { | l | l | r | r | } \hline 8 / 1 & \text { Cash } & 60,000 & \\\hline & \text { Add. Paid-in Capital from Treasury Stock Transactions. } & 15,000 & \\\hline & \text { Treasury Stock } & & 75,000 \\\hline\end{array}$

A stock split reduces retained earnings.

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(True/False)

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Question 2

Correct Answer:

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False

If a corporation wishes to change the par value per share on its common stock, it must amend its articles of incorporation.

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(True/False)

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Question 3

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True

Corrections to past years' financial statements are called prior-period adjustments.

(True/False)

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Question 4

Veneto Vineyards reacquired 18,000 shares of its $1 par common stock for $15 per share. What is the journal entry necessary to record this transaction?

(Multiple Choice)

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Question 5

What must a company disclose concerning convertible equity securities?

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Question 6

Retained earnings are amounts invested by the equity holders of the company.

(True/False)

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Question 7

The total number of shares that a firm can legally issue are called ________.

(Multiple Choice)

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Question 8

On January 1, 2018, TNT, Inc. issued 1,500 shares of $80 par value, convertible preferred shares for $200,000. Each preferred share is convertible into one share of $10 par common stock. What is the necessary journal entry to record this transaction?

(Multiple Choice)

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Question 9

The disclosures for stockholders' equity must include the pertinent rights and privileges of the various securities outstanding.

(True/False)

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Question 10

The Magic Flute Company paid cash dividends totaling $260,000 in 2016 and $210,000 in 2017. In 2018, the company will pay cash dividends of $980,000. There were no dividends in arrears as of January 1, 2016. There are 25,000 shares of common stock outstanding and 70,000 shares of 6 percent, $100 par cumulative preferred stock outstanding. What is the amount of cash dividends payable to common stockholders in 2018?

(Multiple Choice)

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Question 11

Price Co. reported net income of $18,000 for the current year. It had unrealized losses on available-for-sale debt securities of $1,700 after tax, and a foreign currency translation loss of $1,000 after tax. What is comprehensive income for the current year?

(Multiple Choice)

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Question 12

On January 1, 2018, Illusions, Inc. issued 900 shares of $95 par value, callable preferred shares for $110,000, with the right to call the shares on January 1, 2019 for $100 per share. The company calls all 900 shares on January 1, 2019. What is the necessary journal entry to record this transaction for 2019?

(Multiple Choice)

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Question 13

Where are dividends in arrears reported?

(Multiple Choice)

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Question 14

Comprehensive income includes all changes in equity during a period from all sources.

(True/False)

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Question 15

On January 1, 2018, TNT, Inc. issued 2,100 shares of $50 par value, convertible preferred shares for $200,000. Each preferred share is convertible into one share of $10 par common stock. On August 1, 2018, all preferred shareholders converted their shares into common stock. What is the necessary journal entry to record the August 1st transaction?

(Multiple Choice)

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Question 16

________ is the corporation's own shares repurchased by the corporation and held for some future use.

(Multiple Choice)

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Question 17

Fancy Flights has 200,000 common shares outstanding, and they are currently trading at $47 per share. Net income is $235,000. What is the Price-to-Earnings Ratio? (Round your answers to two decimal places, X.XX.)

(Multiple Choice)

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Question 18

On January 1, 2018, Illusions, Inc. issued 900 shares of $90 par value, callable preferred shares for $150,000. Illusions has the right to call the shares on January 1, 2019 for $100 per share. What is the necessary journal entry to record the issuance of the callable shares?

(Multiple Choice)

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Question 19

Monet's Minions, Inc. reacquired 10,000 shares of its $1 par common stock for $11 per share on August 1. On October 31 they sold 9,000 treasury shares for $7 per share. Assuming a zero balance in the Additional Paid-in Capital from Treasury Stock Transactions account, what is the necessary journal entry for the October transaction?

(Multiple Choice)

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Question 20

Coyote Company reacquired 25,000 shares of its $1 par common stock for $15 per share on June 1. On July 1 they sold 10,000 treasury shares for $20 per share. On August 1 they sold 5,000 treasury shares for $12 per share. Prepare the necessary journal entries (omit explanations).

A stock split reduces retained earnings.

If a corporation wishes to change the par value per share on its common stock, it must amend its articles of incorporation.

Corrections to past years' financial statements are called prior-period adjustments.

Veneto Vineyards reacquired 18,000 shares of its $1 par common stock for $15 per share. What is the journal entry necessary to record this transaction?

What must a company disclose concerning convertible equity securities?

Retained earnings are amounts invested by the equity holders of the company.

The total number of shares that a firm can legally issue are called ________.

On January 1, 2018, TNT, Inc. issued 1,500 shares of $80 par value, convertible preferred shares for $200,000. Each preferred share is convertible into one share of $10 par common stock. What is the necessary journal entry to record this transaction?

The disclosures for stockholders' equity must include the pertinent rights and privileges of the various securities outstanding.

Price Co. reported net income of $18,000 for the current year. It had unrealized losses on available-for-sale debt securities of $1,700 after tax, and a foreign currency translation loss of $1,000 after tax. What is comprehensive income for the current year?

Where are dividends in arrears reported?

Comprehensive income includes all changes in equity during a period from all sources.

________ is the corporation's own shares repurchased by the corporation and held for some future use.

Fancy Flights has 200,000 common shares outstanding, and they are currently trading at $47 per share. Net income is $235,000. What is the Price-to-Earnings Ratio? (Round your answers to two decimal places, X.XX.)

On January 1, 2018, Illusions, Inc. issued 900 shares of $90 par value, callable preferred shares for $150,000. Illusions has the right to call the shares on January 1, 2019 for $100 per share. What is the necessary journal entry to record the issuance of the callable shares?

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

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