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

Earnings per share is calculated by dividing _______________ available for common stockholders by the ________________ number of common shares outstanding.

If a corporation declares a dividend based upon paid-in capital it is known as a

Common Stock Dividends Distributable is reported as additional paid-in capital in the stockholders' equity section.

A credit balance in retained earnings represents

Prior period adjustments are reported

During 2017 Red Dragon Corporation had the following transactions and events: 1. Issued par value preferred stock for cash at par value. 2. Issued par value common stock for cash at an amount greater than par value. 3. Completed a 2 for 1 stock split in which the $10 par value common stock was changed to $5 par value stock. 4. Declared a small stock dividend when the market value was higher than the par value. 5. Declared a cash dividend. 6. Made a prior period adjustment for understatement of net income. 7. Issued par value common stock for cash at par value. 8. Paid the cash dividend. 9. Issued the shares of common stock required by the stock dividend declaration in 4. above. Instructions Indicate the effect(s) of each of the foregoing items on the subdivisions of stockholders' equity. Present your answers in tabular form with the following columns. Use (I) for increase (D) for decrease and (NE) for no effect.

During 2017 Miami Inc. had sales revenue $1328000 gross profit $728000 operating expenses $398000 cash dividends $90000 other expenses and losses $40000. Its corporate tax rate is 30%. What was Miami's income tax expense for the year?

Santos Corporation gathered the following information for the fiscal year ended December 31 2017: Sales \ 1,500,000 Operating expenses 160,000 Cost of goods sold 960,000 Loss on disposal of equipment 40,000 Santos Corporation is subject to a 30% income tax rate. Instructions Prepare a partial income statement beginning with income from operations.

The per share amount normally assigned by the board of directors to a large stock dividend is

Timber Ridge Corporation was organized on January 1 2015. During its first year the corporation issued 40000 shares of $5 par value preferred stock and 400000 shares of $1 par value common stock. At December 31 the company declared the following cash dividends: 2015 \ 8,000 2016 \ 30,000 2017 \ 70,000 Instructions (a) Show the allocation of dividends to each class of stock assuming the preferred stock dividend is 5% and not cumulative. (b) Show the allocation of dividends to each class of stock assuming the preferred stock dividend is 6% and cumulative. (c) Journalize the declaration of the cash dividend at December 31 2017 using the assumption of part (b).

Bodkin Inc. has 5000 shares of 5% $100 par value noncumulative preferred stock and 50000 shares of $1 par value common stock outstanding at December 31 2016 and December 31 2017. The board of directors declared and paid a $25000 dividend in 2016. In 2017 $55000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2017? Preferred Common A) \ 0 \ 55,000 B) \ 25,000 \ 30,000 C) \ 27,500 \ 27,500 D) \ 35,000 \ 20.000

The return on common stockholders' equity is computed by dividing

Peabody Inc. has 5000 shares of 7% $100 par value cumulative preferred stock and 50000 shares of $1 par value common stock outstanding at December 31 2017. If the board of directors declares a $30000 dividend the

Retained earnings are occasionally restricted

CCCR Inc. has 2000 shares of 6% $50 par value cumulative preferred stock and 100000 shares of $1 par value common stock outstanding at December 31 2016 and December 31 2017. The board of directors declared and paid a $4000 dividend in 2016. In 2017 $24000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2017?

Many companies prepare a stockholders' equity statement instead of presenting a detailed stockholders' equity section in the balance sheet.

Previously issued financial statements with errors are required to be restated under

Tortola Company reported the following balances at December 31 2016: common stock $500000; paid-in capital in excess of par value $100000; retained earnings $250000. During 2017 the following transactions affected stockholders' equity. 1. Issued preferred stock with a par value of $150000 for $200000. 2. Purchased treasury stock (common) for $40000. 3. Earned net income of $140000. 4. Declared and paid cash dividends of $75000. Instructions Prepare the stockholders' equity section of Tortola Company's December 31 2017 balance sheet.

Preferred dividends paid are added back to net income in calculating earnings per share for common stockholders.

Corporations report which of the following in a separate section of the income statement?