Exam 11: Reporting and Analyzing Stockholders Equity

Most publicly held corporations are required to make extensive disclosure of their financial affairs to the _______________.

A stock dividend is a pro rata distribution of cash to a corporation's stockholders.

Herman Corporation had net income of $120,000 and paid dividends of $24,000 to common stockholders and $20,000 to preferred stockholders in 2014. Herman Corporation's common stockholders' equity at the beginning and end of 2014s was $450,000 and $550,000, respectively. Herman Corporation's return on common stockholders' equity is

The par value of common stock must always be equal to its market value on the date the stock is issued.

Dividends in arrears are dividends on

On January 1, 2014, the Black Corporation had $2,000,000 of $10 par value common stock outstanding that was issued at par and Retained Earnings of $1,000,000. The company issued 140,000 shares of common stock at $15 per share on July 1. On December 15, the board of directors declared a 10% stock dividend to stockholders of record on December 31, 2014, payable on January 15, 2015. The market value of Black Corporation stock was $17 per share on December 15 and $16 per share on December 31. Net income for 2014 was $500,000. Instructions (1) Journalize the issuance of stock on July 1 and the declaration of the stock dividend on December 15. (2) Prepare the stockholders’ equity section of the balance sheet for Black Corporation at December 31, 2014.

The board of directors of Benson Company declared a cash dividend of $1.50 per share on 42,000 shares of common stock on July 15, 2014. The dividend is to be paid on August 15, 2014, to stockholders of record on July 31, 2014. The correct entry to be recorded on August 15, 2014, will include a

Identify the effect the declaration of a stock dividend has on the par value per share and book value per share.

If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is

A company would not acquire treasury stock

In its first year of operations, Martinez Corporation had the following transactions pertaining to its $10 par value preferred stock. Instructions (a) Journalize the transactions. (b) Indicate the amount to be reported for (1) preferred stock, and (2) paid-in capital in excess of par value-preferred stock at the end of the year.

The following information pertains to Benedict Company. Assume that all balance sheet amounts represent average balance figures. Total assets \ 300,000 Stockholders' equity-common 150,000 Total stockholders' equity 200,000 Sales revenue 100,000 Net income 25,000 Number of shares of common stock 6,000 Common dividends 6,000 MC: 199 (count) Preferred dividends 4,000 What is the return on common stockholders' equity ratio for Benedict?

A corporation must be incorporated in each state in which it does business.

The major advantages of the corporate form of organization include (1) limited _________________ of stockholders, (2) continuous ____________________ and (3) ease of transferring ___________________.

The par value of a stock

Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership.

On January 1, 2014, Holt Corporation had $1,000,000 of common stock outstanding that was issued at par and retained earnings of $750,000. The company issued 60,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year. Instructions Journalize the declaration of a 15% stock dividend on December 10, 2014, for the following two independent assumptions. (a) Par value is $10 and market value is $16. (b) Par value is $5 and market value is $8.

On January 1, 2014, Mather Corporation had Retained Earnings of $625,000. During the year, Mather had the following selected transactions: 1. Declared stock dividends of $40,000 2. Declared cash dividends of $50,000 3. A 2 for 1 stock split involving the issue of 200,000 shares of $5 par value common stock for 100,000 shares of $10 par value common stock 4. Suffered a net loss of $80,000 Instructions Prepare a Retained Earnings Statement for the year.

Hutchinson Company had retained earnings of $15,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?

If the market value of the assets received and the market value of the stock issued are both available, then what amount should be used to value the assets?