Exam 14: Corporations: Dividends, Retained Earnings, and Income Reporting

If a stockholder receives a dividend that reduces retained earnings by the fair value of the stock the stockholder has received a

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

On January 1 2017 Lundy Corporation had Retained Earnings of $400000. During the year Lundy had the following selected transactions: 1. Declared stock dividends of $50000. 2. Declared cash dividends of $90000. 3. A 2 for 1 stock split involving the issuance of 200000 shares of $5 par value common stock for 100000 shares of $10 par value common stock. 4. Suffered a net loss of $70000. 5. Corrected understatement of 2016 net income because of an inventory error of $48000. Instructions Prepare a retained earnings statement for the year.

Dividends are predominantly paid in

The date a cash dividend becomes a binding legal obligation to a corporation is the

In 2017 Spanish Fort Corporation had net sales of $500000 and cost of goods sold of $300000. Operating expenses were $93000 and interest expense was $7500. The corporation's tax rate is 30%. The corporation declared preferred dividends of $7000 in 2017 and its average common stockholders' equity during the year was $500000. Instructions (a) Prepare an income statement for Spanish Fort Corporation. (b) Compute Tubb Corporation's return on common stockholders' equity for 2017.

Each of the following decreases total stockholders' equity except a

The cumulative effect of the declaration and payment of a cash dividend on a company's balance sheet is to

When computing earnings per share

Prior period adjustments to income are reported in the current year's income statement.

Dividends may be declared and paid in cash or stock.

Corporation income tax expense is

Eggers Inc. has retained earnings of $1600000 and total stockholders' equity of $4000000. It has 400000 shares of $5 par value common stock outstanding which is currently selling for $30 per share. If Eggers declares a 10% stock dividend on its common stock:

The formula for computing earnings per share is net income

Rendezvous Inc. has 10000 shares of 5% $100 par value noncumulative preferred stock and 20000 shares of $1 par value common stock outstanding at December 31 2017. There were no dividends declared in 2016. The board of directors declares and pays a $110000 dividend in 2017. What is the amount of dividends received by the common stockholders in 2017?

In the stockholders' equity section of the balance sheet

The following information is available for Xavier Corporation: Retained Earnings, December 31, 2016 \1 ,500,000 Net Income for the vear ended December 31, 2017 \2 00,000 The company accountant in preparing financial statements for the year ending December 31 2017 has discovered the following information: The company's previous bookkeeper who has been fired had recorded depreciation expense on equipment in 2015 and 2016 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $25000 ignoring income taxes. Depreciation was computed by the straight-line method in 2017. Instructions (a) Prepare the entry for the prior period adjustment. (b) Prepare the retained earnings statement for 2017.

Chetola Corporation has 120000 shares of $5 par value common stock outstanding. It declared a 15% stock dividend on June 1 when the market price per share was $13. The shares were issued on June 30. Instructions Prepare the necessary entries for the declaration and payment of the stock dividend.

The effect of a stock dividend is to

A prior period adjustment is occasionally reported in company financial statements. What is a prior period adjustment and how is it reported in the financial statements?