Exam 10: Stockholders Equity

____________________ is the name of the account credited when a corporation issues common stock for a price greater than par.

When treasury stock is reissued at a price that is less than their cost, the difference should be credited to retained earnings.

When computing the total payout ratio, common stock dividends plus common stock repurchases are included in the numerator.

On March 31, 2013, Legends Entertainment, Inc. had common stock of $230,000, paid-in capital in excess of par of $540,000, and retained earnings of $65,000. During the following year, 500 shares of stock were sold for $60,000, of which $40,000 represented paid-in capital in excess of par. The company reported net income of $140,000 for the year ended March 31, 2014. Also during the year, $80,000 of dividends were declared and paid.Prepare the Statement of Stockholders' Equity at March 31, 2014.

Since stock dividends are paid with shares of stock instead of cash, no reduction in Retained Earnings is recorded.

A ____________________ is a correction of retained earnings resulting from a previous error that affected net income.

Match the terms to the definitions. a.authorized shares i.stock option b.issued shares j.stock warrant c.outstanding shares k.treasury stock d.par value l.call provision e.stated capital (legal capital) m.earnings per share f.preemptive right n.dividend yield ratio g.retained earnings o.dividend payout ratio h.stock split -A stated amount of capital that cannot be returned to the stockholders unless the corporation is liquidated.

The number of shares sold to stockholders are ____________________ shares.

The stated value is the price at which employees can exercise stock options.

Restricted earnings are usually disclosed in the footnotes to the financial statements, but may sometimes be disclosed in a reserve account in the equity section of the balance sheet.

When a corporation decides whether to pay a cash dividend, which of the following is an important consideration?

Match the following terms to their correct definition. a.Articles of incorporation i.Equity b.Common stock j.Exercise (strike)price c.Contributed capital k.Liquidating dividend d.Corporate charter l.No-par stock e.Current dividend preference m.Payment date f.Date of record n.Preferred stock g.Declaration date o.Prior period adjustment h.Dividends in arrears p.Return on common equity -Stock without a par value.

A regional chain of medical clinics had the following information pertaining to its stockholders' equity accounts at December 1, 2015: No dividends were paid during 2015. On December 15, 2015, the clinic repurchased 3,000 shares of its common stock for $80 per share. On December 31, the bookkeeper closed the books, reporting net income of $2,500,000.

Liquidating dividends must be charged against the capital stock accounts because the corporation's retained earnings are appropriated for future business expansion.

All authorized stock is issued.

Refer to Lanier Tech. What is the amount of the company's total capital stock at December 31, 2015?

If a corporation repurchases 500 shares of its previously-issued common stock for $5,000 and then reissues it for $4,000, which of the following statements is true regarding the difference in the amounts of the repurchase and reissuance?

The stockholders' equity section of the balance sheet appears as follows at January 1, 2014: On March 1, 2014, the company repurchased 800 shares of its common stock at $12 per share but on April 6, 2014, it reissued 600 shares of the shares at $20 per share.

Which of the following statements is true pertaining to participating preferred stock?

On January 15, 2014, a corporation paid a cash dividend that had been declared prior to the end of its previous fiscal year. The entry to pay the dividends includes a debit to