Exam 10: Corporations: Share Capital and Retained Earnings

Journalize the following transactions for Hammers Inc. Jan. 1, 2012 Purchased a $100,000 building on a two-year 10% note payable. The building has a useful life of twenty-five years and is depreciated on a straight-line basis. Feb. 15, 2012 Issued 25,000 common shares at $10/share. Jul. 10, 2012 Issued 15,000 preferred shares at $7/share. Dec. 31, 2012 Record accrued interest on the note and depreciation on the machine.

Which of the following is an advantage of a corporation?

Hancock Enterprise has 30,000 $2 noncumulative preferred shares. It did not pay any dividends for the current year. How much, if any, are the dividends in arrears?

A public corporation has its shares listed for trading in a stock market.

What is the rate of return on shareholders' equity for the year ending 2012 if sales were $200,000, net income was $75,000, total shareholders' equity was $750,000, and total shareholders' equity for 2011 was $675,000 (round to one decimal place)?

If you own 500 shares (2% of a corporation's stock) and the corporation issues 15,000 new shares, how many total shares will you have after exercising your preemptive rights?

Identify the differences between a private and public corporation.

The formula for return on equity is net income divided by average shareholders' equity.

What journal entry is recorded on the date of declaration to avoid a year-end closing entry of the dividends account?

A corporation may declare stock dividends when there is not enough cash to pay a cash dividend.

On which Statement is Accumulated Other Comprehensive Income reported?

Identify two advantages preferred shareholders have over the owners of common shares.

Birch is a publicly traded company and issues 200 preferred shares for $12 per share. Which of the following is a part of the journal entry for this transaction?

When shareholders participate in management, they are demonstrating which shareholder right?

An underwriter usually agrees to:

The components of Shareholders' Equity include the following two major categories:

When a corporation issues shares for assets other than cash, how does it record the assets received?

Earnings that a shareholder receives from a corporation is an example of which shareholder right?

Shareholders receiving their proportionate share of any assets left after a company goes out of business is an example of which shareholder right?

Corporations declare cash dividends from retained earnings.