Exam 13: Equities

Which statement about a "stock split" is correct?

If a company issues 2,000 shares for $55 and then repurchases 50 shares at $55,how much is the contributed capital?

Briefly describe recycling as it pertains to other comprehensive income.

The following is an extract from the balance sheet as at December 31,2017: The company did not declare dividends on preferred shares in 2016.Transactions in 2017 include the following: i.March 15: Hewitt purchased 15,000 preferred shares on the stock exchange for $5.25 per share and held these in treasury. ii.March 28: The company redeemed 5,000 preferred shares directly from shareholders. iii.July 1: The market price of common shares shot up to $5 per share,so Hewitt decided to split the common shares two to one. iv.August 1: Hewitt cancelled 14,000 preferred shares that were held in treasury. v.December 31: The company declared dividends of $0.40 per common share. Required: Prepare the journal entries to record the above transactions.The company uses the single-transaction method to account for treasury shares.

Cardiff Corporation is a public company traded on a major exchange.Cardiff's common shares are currently trading at $21 per share.The board of directors is debating whether to issue a 200% stock dividend or accomplish a similar result by doing a stock split.The board is wondering how shareholders' equity would be affected,and whether the value of the typical shareholder's investment will change. Details of Cardiff's equity section of the balance sheet is as follows: Required: a.At what price would you expect the shares to trade after either transaction? Explain with calculations. b.Show what the equity section of the balance sheet for Cardiff would look like after the stock dividend or stock split. c.Assume that an investor has 6,000 common shares before the stock dividend or stock split.What would be the value of the investor's holdings before and after the stock dividend or stock split? d.What is your recommendation to the board of directors?

List and explain four reasons why a company might repurchase its own shares.

Which statement is correct about the "two transaction method" for treasury shares resold for greater than their repurchase cost?

Where is accumulated other comprehensive income reported and what does it represent?

Which statement is correct concerning property dividends?

Outline the difference between cumulative and non-cumulative dividends.

Which statement is correct?

Below are details relating to balances for the equity accounts of Cauvet Company,and changes to those balances.Note that AOCI is accumulated other comprehensive income. Required: Prepare a statement of changes in equity for the years ended December 31,2019 and 2020.

In which account would "transactions with non-owners" be reported?

Ellwoods Bar and Grill Ltd.sells 1,000 packages of equity security consisting of one common share and one preferred share.Each package was sold for $100;total proceeds were $100,000.At time of sale,the market price of the common shares was $91.00 and the estimated fair value of the preferred shares was $10.00.Contrast the two alternative methods of accounting for this bundled purchase (a)The company uses the relative fair value method and (b)the company uses the residual value method.Use the following table:

Which statement about contributed surplus is correct?

Golf Is for Nerds Inc.sells 20,000 no-par value common shares for $8.00 each on a subscription basis.Terms of the sale require the purchaser to pay $3.00 per share when the contract is signed and the balance in three months' time. Required: Prepare the journal entries at (a)the date of signing the contract; (b)the date that the remaining payment is made; (c)the date the shares are transferred.

As of January 1,2018,the equity section of LD Food Co.'s balance sheet contained the following: ∙ On May 1,2018,the company spent $802,500 to repurchase 300,000 common shares.These shares were cancelled immediately. ∙ On July 15,2018,the company repurchased and cancelled 4,000 preferred shares at $15/sh. ∙ On November 1,2018,the company declared and paid the annual cash dividends on the preferred shares.On the same day,the company issued a 5% stock dividend on common shares.LD Food's stock traded at $7/share after the dividend. Required: Record the journal entries for the above transactions occurring in 2018.

Which statement about a "reverse stock split" is correct?

List the five classes of transactions that explain the change in equity on the statement of changes in equity.

Use the following facts to determine how much each of the three classes of shares receives of the $1,000,000 cash dividend. Facts: In 2019 Blueberry Juice Inc.declared $1,000,000 in cash dividends.Its capital structure includes 300,000 common shares;200,000 cumulative preferred shares "A" each entitled to an annual dividend of $1.00;and 50,000 non-cumulative preferred shares "B" each entitled to an annual dividend of $3.00.The prescribed dividends on both series of preferred shares were paid in 2018;there are no dividends in arrears.