Exam 11: Stockholders Equity

Ferris Company reported the following on its balance sheet: total contributed capital of $186,000,treasury stock of $19,500 and total stockholder's equity of $237,500.Ferris had 1,000,000 authorized shares of its $0.01 par value common stock of which 200,000 were outstanding. What was the amount of additional paid-in capital reported in the balance sheet?

On February 16,Hawthorne Co.declares a $0.68 dividend to be paid on April 5.Hawthorne has 1,900,000 shares of common stock issued and outstanding.The entry recorded by the company on February 16 includes a debit to:

Unpaid dividends on cumulative preferred stock are called dividends payable.

Match each term with the appropriate definition.Not all definitions will be used. -Payment Date

Stock options:

Which of the following statements about the benefits enjoyed by the owners of common stock is not correct?

If you own 200,000 shares of stock in a company with 8 million shares outstanding and the company issues an additional 2 million shares to its employees through a stock purchase plan,your ownership percentage:

Par value of a stock refers to the:

Several years ago,Knox Industries issued 200,000 of its $2 par value stock for a total of $1,600,000.This is the only time that it has sold stock.This year it purchased 2,000 shares of its own stock for $20 a share.As a result of acquiring treasury stock:

Which of the following is an advantage of debt financing?

For a business to be considered a corporation:

Which of the following is not a characteristic of corporate ownership?

Ross Island Co.issues 10,000 shares of no-par value preferred stock for cash at $120 per share.The journal entry to record the transaction will consist of a debit to Cash for $1,200,000 and a credit (or credits)to:

A current dividend preference means that:

Nancy O'Rode,doing business as O'Rode Consulting,performs consulting services for companies that create online learning games for children.On January 1,2018,she started a sole proprietorship by placing $15,000 cash in a bank account opened for the business.Each month during the year,O'Rode withdrew $500 cash from the business for personal use.At December 31,2018,after the last withdrawal,the Drawings account reflected a debit balance of $6,000.During the year,the usual journal entries for the year,including adjusting and closing entries for the revenue and expense accounts,resulted in total revenue of $60,000,total expenses of $12,000,and net income of $48,000.(For purposes of the related journal entry,use the accounts "Consulting Revenue" and "Operating Expenses.") Part a. Prepare the journal entry to record the initial capital contribution. Part b. Prepare the journal entry to record one of the monthly withdrawals. Part c. Prepare the journal entry to close the net income to the N. O'Rode, Capital account. Part d. Prepare the journal entry to close the N. O'Rode, Drawings accounts at the end of the year. Part e. Prepare a Statement of Owner's Equity for the year ending December 31, 2018.

All other things being equal,the higher the return on equity ratio,the better the financial performance of the company.

Palomino Enterprises purchased 2,000 shares of its own stock at $8 a share.Later,it reissued the 2,000 shares for $20,000.The effect of the entry to record the sale of treasury stock on the accounting equation includes a(n):

A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share.The entry to record this transaction includes a debit to Cash for:

At the end of the accounting period,but before closing entries are made,Doug,the proprietor of Pepper's Cafe,has a debit balance of $12,250 in his drawing account and a credit balance of $36,150 in his capital account.Which of the following statements is correct?

Salmon,Inc.issues 500,000 shares of preferred stock for $60 a share.The stock has a fixed annual dividend rate of 5% and a par value of $18 per share.The current price of the preferred stock is $64 a share.If sufficient dividends are declared,preferred stockholders can anticipate receiving annual dividends of: