Exam 11: Stockholders Equity

Select the best answer from the list below to complete statements 1-11 that follow. -Stock issued by the firm, but then repurchased and not retired is ________________________.

Select the letter of the term each statement best describes. -Allows the issuing firm to eliminate a class of stock by paying the stockholders a fixed amount.

Museum Corporation acquired a new manufacturing building by issuing 10,000 shares of its $50 par value preferred stock with a $75 per share market price. Similar buildings have recently cost $780,000. What are the effects of this transaction on the accounting equation for Museum?

From the following list, identify each item as operating O, investing I, financing F, or not separately reported on the statement of cash flows N. -Conversion of preferred stock into common stock

Lear Flower Shop presented the stockholders' equity section of its balance sheet on January 1, 2015, as follows: All common shares were originally sold for $6 each. The following transactions occurred during 2015: - Reacquired 3,000 shares of common stock at $15 per share on February 16. - Sold 2,000 shares of treasury stock at $20 per share on June 1. Part 1. Show the effects of the transactions on the accounting equation. Part 2. How many shares of stock are outstanding at June 1, immediately after the sale of the 2,000 shares of treasury stock?

Fairchild Company acquired a building valued at $210,000 for property tax purposes in exchange for 6,000 shares of its $10 par common stock. The stock is widely traded and selling for $31 per share. At what amount should the building be recorded by Fairchild Company?

Which of the following is true concerning a sole proprietorship?

Marvin's Shrimp Restaurant incorporated as a new business on January 1, 2015. The company is authorized to issue 40,000 shares of $1 par value common stock, and 10,000 shares of 4%, $5 par value, cumulative, participating preferred stock. On January 1, 2015 the company issued 15,000 shares of common stock for $8 per share. Net income for the year ended December 31, 2015, was $115,000. Cash dividends in the amount of $30,000 were declared, but only $25,000 were paid as of year-end. Prepare the stockholders' equity section of the balance sheet for Marvin's Shrimp Restaurant at December 31, 2015.

Select the letter of the term each statement best describes. -Stock issued by the firm then repurchased but not retired.

With respect to the statement of cash flows,

A balance sheet of a sole proprietorship includes only the business assets and liabilities, not the personal assets of the owner.

All of the following statements are true about a 3-for-1 split, except:

Comprehensive income is the increase in net assets resulting from all transactions occurring during an accounting period except stockholders' investments and dividends.

The stockholders' equity section of the balance sheet for Scuba Gear Corporation appeared as follows before its recent stock dividend: Scuba Gear declared a 10% stock dividend when the market price per share was $8. After the stock dividend was distributed, the components of the stockholders' equity section were: D) There would be no change in the components of stockholders' equity.

Stella Gregson received a windfall from one of her investments. She would like to invest $100,000 of the money in Shoreline Industries, which is offering common stock, preferred stock, and bonds on the open market. The common stock has paid $8 per share in dividends for the past three years, and the company expects to be able to perform as well in the current year. The current market price of the common stock is $100 per share. The preferred stock has an 8% dividend rate, cumulative and nonparticipating. The bonds are selling at par with an 8% stated rate. Required: 1. What are the advantages and disadvantages of each type of investment? 2. Recommend one type of investment over the others to Stella and justify your reason.

Select the best answer from the list below to complete statements 1-11 that follow. -The characteristic where each partner is personally liable for the debts of the partnership is known as _____________________.

All issued stock is outstanding.

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. Items are used only once. -Which item increases Additional Paid-In Capital - Treasury Stock?

When stock is issued for a noncash asset, the par value of the stock is the best indicator of the value of the asset.

The payment of dividends is a financing activity.