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

Earnings per share is reported for both preferred and common stock.

In determining earnings per share, dividends for the current year on noncumulative preferred stock should be

Cash dividends are not a liability of the corporation until they are declared by the board of directors.

Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock

Lopez, Inc. has 2,000 shares of 4%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2009, and December 31, 2010. The board of directors declared and paid a $3,000 dividend in 2009. In 2010, $15,000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2010?

The following financial information is available for Duncan Corporation. The weighted average number of shares of common stock outstanding was 80,000 for 2009 and 100,000 for 2010. Instructions Calculate earnings per share and return on common stockholders' equity for 2010 and 2009.

Three important dates associated with dividends are the: (1)__________________, (2)__________________, and (3)__________________.

Dividends may be declared and paid in cash or stock.

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

A corporation is not committed to a legal obligation when it declares

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

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

Sun Inc. has 5,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2010. What is the annual dividend on the preferred stock?

Prior period adjustments are reported

Each of the following decreases retained earnings except a

At December 31, 2010, Starr Company has $500,000 of $100 par value, 6%, cumulative preferred stock outstanding and $2,000,000 of $10 par value common stock issued. Starr's net income for the year is $410,000. Instructions Compute earnings per share of common stock for 2010 under the following independent situations. (Round to two decimals.) (a) The dividend to preferred stockholders was declared, and there has been no change in the number of shares of common stock outstanding during the year. (b) The dividend to preferred stockholders was not declared, and 10,000 shares of common treasury stock were held throughout the year. The preferred stock is cumulative.

On January 1, Sandford Corporation had 80,000 shares of $10 par value common stock outstanding. On June 17, the company declared a 15% stock dividend to stockholders of record on June 20. Market value of the stock was $15 on June 17. The entry to record the transaction of June 17 would include a

Which one of the following is not necessary in order for a corporation to pay a cash dividend?

Indicate the respective effects of the declaration of a cash dividend on the following balance sheet sections:

Regular dividends are declared out of