Exam 11: Stockholders Equity

You form a partnership with your best friend.You have contributed 65% of the capital and can claim 65% of the net income.At the end of the first year,you discover that your partner has run up $40,000 in debt using the business' credit card.The maximum you could be liable for is:

Match each term with the appropriate definition.Not all definitions will be used. -Growth Investment

Which one of the following statements about earnings per share (EPS)is correct?

Choose the appropriate letter to match the description with the purpose and accounting effect of the type of stock transaction.Some letters will appear in more than one column and not all letters will necessarily be used.Some blanks will require more than one letter. Stock Split Large Stock Dividend Stock Repurchase Purpose Accounting Effect A. To obtain shares to reissue to employees as part of employee stock purchase plans. B. To increase the number of shares outstanding and decrease the per-share market price while managing a company that you expect will struggle financially in the future. C. To reduce the number of outstanding shares to increase per-share measures of earnings. D. To increase the number of shares outstanding and decrease the per-share market price while signaling to financial statement users that the company expects significant future earnings. E. To obtain shares that can be reissued as payment for purchases of other companies. F. To send a signal to investors that the company itself believes its own stock is worth acquiring. G. Reduces stockholders' equity. H. Changes par value per share. I. Changes Additional Paid-in Capital account balance. J. Reduces Retained Earnings. K. Does not affect any of the account balances that comprise stockholders equity

Phelps,Inc.had assets of $67,646,liabilities of $15,466,and 10,718 shares of outstanding common stock at December 31,2017.Net income for 2017 was $7,829.The company had assets of $79,571,liabilities of $18,551,10,771 shares of outstanding common stock,and its stock was trading at a price of $10 per share at December 31,2018.Net income for 2018 was $9,993. Required: Part a.Calculate EPS for 2018. Part b.Calculate ROE for 2018. Part c.Calculate the Price/Earnings ratio for 2018

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

If a company does not have any accumulated other comprehensive income (loss),stockholders' equity is the:

When a company issues stock to the public for the first time,the issuance is called a(n):

If a company's earnings per share and return on equity both increase:

The laws governing corporations:

Groucho,Harpo,and Chico form a partnership on January 1,2018.Groucho contributes $90,000,Harpo $70,000,and Chico $40,000 to a business called Marx Brothers' Partnership.On a monthly basis,each partner is allocated income and is allowed to receive cash from the business in proportion to the capital they provided.Assume that Groucho receives $2,700 cash per month. Required: Part a.Prepare the journal entry for the initial investment. Part b.Determine the monthly distribution amounts for each of the three partners. Part c.Prepare the journal entry that would be made in one month for the monthly distribution. Part d.Prepare the journal entry for the allocation of an annual net income of $84,000.For purposes of this journal entry,assume Sales Revenue totaled $116,000 and that all expenses,totaling $32,000,were recorded in a single account called Operating Expenses. Part e.Prepare the journal entry to close the Drawings accounts at the end of the year. Part f.Prepare a Statement of Partners' Equity (assume no additional investments made).

If Squid Roe Company's P/E ratio is 12,which of the following statements is correct?

Dividends Payable is recorded as a credit on the:

The information below was extracted from the most recent financial statements of Milton Technologies (in millions,except for stock price): What is the P/E ratio for the company's stock for the current year?

The par value of stock indicates what the stock is worth.

The journal entry to record a large stock dividend includes a debit to Retained earnings and a credit to:

All other things being equal,when a company repurchases its common stock:

Stock splits and large stock dividends have which of the following similarities or differences in their effects and requirements for a journal entry?

A corporation does not make a journal entry when:

A corporate charter specifies that the company may issue 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 shares of treasury stock after these transactions have been accounted for is: