Exam 10: Stockholders Apos Equity

If a corporation desires to reacquire some of its issued shares of stock, how would it accomplish this, i.e., how would the corporation determine which of its shares to buy back or from which stockholders?

Leather Creations has been in business for two years. On December 31, 2020 (the end of the second year), the company had the following capital stock account balances immediately prior to a meeting of its board of directors.: No dividends were paid during 2019. Net income for 2020 is $110,000. At its December 31, 2020 meeting the board declares a cash dividend. Complete the table below to indicate the amount of dividends that would be distributed to each class of stockholder if the following amounts of dividends are available:

When a corporation issues a small stock dividend, which of the following is false?

A corporation had several transactions affecting its stockholders' equity accounts during the year. The transactions are presented in chronological order. In the space provided, indicate the impact on the equity accounts shown by placing the respective dollar amounts along with a plus sign (+) for an increase in the account balance, minus sign (−) for a decrease, or N/A if there is no impact on the account balance.

Lanier Tech This company was incorporated as a new business on January 1, 2019. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, 2019, the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share. Net income for the year ended December 31, 2019 was $375,000. -Refer to Lanier Tech. What is the amount of the company's total capital stock at December 31, 2019?

Lanier Tech This company was incorporated as a new business on January 1, 2019. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, 2019, the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share. Net income for the year ended December 31, 2019 was $375,000. -Refer to Lanier Tech. Assume that no dividends were declared or paid during the first year of operations. What is the dollar amount of total stockholders' equity reported on the balance sheet at December 31, 2019?

Dividends in arrears are associated with the cumulative preferred stock only.

When a corporation declares a cash dividend, which of the following is true?

Match the terms to the definitions. -A measure of net income measured by each share of common stock.

Lanier Tech This company was incorporated as a new business on January 1, 2019. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, 2019, the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share. Net income for the year ended December 31, 2019 was $375,000. -Refer to Lanier Tech. What is the number of the company's unissued shares of common stock at December 31, 2019?

When stockholders exchange their shares of stock for additional shares, and there is a corresponding reduction in the par value of the stock, a stock ____________________ has occurred.

The following information comes from a balance sheet at December 31: Answer the following questions: A)How many shares of common stock are issued? B)How many shares of common stock are outstanding? C)Assuming that all shares were sold at the same price, what was the original selling price per share? D)If the company declares a 2-for-1 stock split on December 31, describe the resulting change, if any, in the balances in capital stock accounts and the par value of the common stock.

Which of the following is true for a corporation that issues 1,000 shares of $2 par common stock at $5 per share? a.The common stock account will increase by $5,000. b.$2 per share is the maximum selling price for these shares of stock. c.Total stockholders' equity will increase by $5,000. d.The per share dividend amount on these shares is $2.

Match the following terms to their correct definition. -If a corporation has only one class of stock, this is usually it.

Ladder Distributors The stockholders' equity section of the December 31, 2019, balance sheet is provided below: Assume that all of the 20,000 shares of stock that was issued as of December 31, 2019, was issued for $42 per share. On March 1, 2020, the company reacquired 4,000 shares of its common stock for $50 per share. -Refer to Ladder Distributors. Suppose the company reissued 1,000 shares of its treasury stock on June 1, 2020, for $44 each. Which of the following is true regarding the entry required to record this transaction?

If a corporation declares a 2-for-1 stock split, which of the following is true?

Distinguish between par value and market value. Which measure is the better indicator of the true value of the stock?

A corporation may extend a tender offer when it desires to acquire treasury stock.

Labor Finders, Inc. Selected data from the company's financial statements are presented below: -Refer to Labor Finders, Inc. The company's 2020 total payout ratio is reported as

The balance in the retained earnings account represents