Exam 13: Accounting for Corporations

On January 10,a corporation purchased 5,000 shares of its own common stock at $17.50 per share.On August 4,a total of 1,000 treasury shares were sold at $19.00 per share.These are the only treasury stock transactions ever made by the corporation.Prepare the journal entries required on January 10 and August 4.

A company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the dividend declaration is:

A stock dividend decreases the market price of the company's stock.

Xtreme Sports has $100,000 of 8% noncumulative,nonparticipating,preferred stock outstanding.Xtreme Sports also has $500,000 of common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,Xtreme Sports paid cash dividends of $30,000.This dividend should be distributed as follows:

Given the following information about a corporation's current year activities,compute the retained earnings for the current year.

Treasury stock is stock that has been authorized,issued,and is outstanding.

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends,the unpaid amount is called ____________________________.

A preemptive right means shareholders can purchase their proportional share of common stock issued later by the corporation.

A company paid a cash dividend of $0.44 per share during the current year,and reported 18,000 shares of common stock issued,and 2,000 common shares in treasury stock during the current year.The year-end market price per share was $27.50.Calculate the following: (1)total amount of cash dividends paid to common shareholders,and (2)dividend yield.

If the dividends account is not recorded as a reduction to Retained Earnings on the date of declaration,the dividends account is closed to Retained Earnings at the end of the accounting period.

Explain where each of the following items should appear in the financial statements of a corporation: (1)The accounting department discovered that an entry was made last year to Prepaid Insurance instead of to Insurance Expense.The after-tax effect of the charge to Prepaid Insurance was $11,000. (2)The company grants five of its employees the option to purchase 100 shares of its $5 par value common stock at its current market price of $20 per share anytime with the next five years.None of the employees exercised the options in the current year.

Stocks that pay relatively large cash dividends on a regular basis are called:

A company reported $990,000 in net income for the current year.Total weighted-average number of common shares outstanding are 150,000 shares,and the year-end market price is $79.20 per common share.Calculate the company's price earnings ratio.

The board of directors of a corporation:

The Discount on Common Stock account reflects:

A corporation is a legal entity separate from its owners.

A company made an error in recording the 2009 purchase of computer equipment as an expense.This was discovered in 2011.The item should be reported as a prior period adjustment on the 2009 income statement.

Preferred stock which confers no right to prior periods' unpaid dividends if they were not declared is called:

The number of shares that a corporation's charter allows it to sell is referred to as:

A company reported net income of $850,000 for the current year.The year-end market price per common share was $12 and there were 425,000 weighted-average shares of common stock outstanding.Calculate the company's price-earnings ratio.