Exam 11: Stockholders Equity

Brazee Company has the following paid-in capital: If the company pays a $70,000 dividend,and the preferred stock is cumulative and two years' dividends are in arrears,what is the amount the common stockholders will receive?

Morris Lest recorded the closing entries for his sole proprietorship.The entry to close the M.Lest,Drawings account requires a:

Match each term with the appropriate definition.Not all definitions will be used. -Outstanding Shares

Hopkins,Inc.has 1,000 shares of common stock and 1,000 shares of preferred stock outstanding.The preferred stock has a cumulative dividend preference.Both classes of stock have a par value of $10.The preferred stock has a dividend rate of 6 percent.Hopkins failed to pay a dividend during the prior year.During the current year,the board of directors declares dividends totaling $2,000.Accordingly,the company will distribute dividends in the amount of:

Carla Vista Enterprises buys back 600,000 shares of its stock from investors at $6.50 a share.Two years later,it reissues this stock for $6.00 a share.The stock reissue would be recorded with a debit to Cash for:

The effect of a stock dividend is to:

Anthem Inc.issues 200,000 shares of stock with a par value of $0.01 for $150 per share.Three years later,it repurchases these shares for $80 per share.Anthem records the repurchase in which of the following ways?

Match each term with the appropriate definition.Not all definitions will be used. -Cash Dividend

Council Crest,Inc.had 20,000 shares issued and outstanding of its $.50 par value common stock.At December 31,Common Stock equaled $10,000,Retained Earnings equaled $20,000 and Total stockholders' equity equaled $50,000 prior to a 2-for-1 stock split.As a result of a 2-for-1 stock split:

An LLC is different from a corporation in that an LLC has:

Company Z has 8 million shares of common stock authorized with a par value of $1 and a market price of $72.There are 4 million outstanding shares and 1 million shares held in treasury stock. Required: Part a.Prepare the journal entry if the company declares and distributes a 10% stock dividend. Part b.Show the effect of the 10% stock dividend on assets,liabilities,and stockholders' equity. Part c.Prepare the journal entry if the company declares and distributes a 100% stock dividend. Part d.Show the effect of the 100% stock dividend on assets,liabilities,and stockholders' equity.

Which of the following statements about Retained Earnings is correct?

Items such as unrealized gains and losses from pensions,foreign currencies or financial investments are reported as:

Advantages of debt financing over equity financing include that:

Issuing stock to obtain financing is called equity financing.

Which of the following statements about stock options is not correct?

A corporate charter specifies that the company may sell up to 20 million shares of stock.The company sells 12 million shares to investors and later buys back 3 million shares.The current number of outstanding shares after these transactions have been accounted for is:

State laws often restrict dividends to the amount of Retained Earnings.

Knapp Industries began business on January 1,2018 by issuing all of its 1,000,000 authorized shares of its $1 par value common stock for $40 per share.On June 30,Knapp declared a cash dividend of $2 per share to stockholders of record on July 31.Knapp paid the cash dividend on August 30.On November 1,Knapp reacquired 200,000 of its own shares of stock for $50 per share.On December 22,Knapp resold 100,000 of these shares for $60 per share. Required: Part a.Prepare all of the necessary journal entries to record the events described above. Part b.Prepare the stockholders' equity section of the balance sheet as of December 31,2018 assuming that the net income for the year was $6,000,000.

A company has net income of $5.6 million.Stockholders' equity at the beginning of the year is $32.55 million and,at the end of the year,it is $38.15 million.The only change to stockholders' equity came from net income.The return on equity ratio is approximately: