Exam 12: Stockholders Equity

The par value of stock refers to its value on the open market.

Outstanding shares of stock are

An advantage of the corporate form of business is

Beckham Corporation has 3,000 shares of $100 par value,7 percent cumulative preferred stock,and 10,000 shares of $10 par value common stock outstanding during its first five years of operation.Beckham Corporation paid cash dividends as follows: 2009,$30,000; 2010,$0; 2011,$65,000; 2012,$30,000; 2013,$15,000.The amount of dividends received by the common stockholders during 2012 was

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

Financing a business with common stock is riskier than financing it with bonds.

On the balance sheet,treasury stock owned by the company is classified properly as

The entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury shares.

Dividends in arrears are often disclosed in the notes to the financial statements.

Elmore Corporation had the following shares of stock outstanding on December 31,2013: Common stock,$250 par value,200,000 shares outstanding Preferred stock,8 percent,$50 par value,cumulative,20,000 shares outstanding Dividends were in arrears for 2011 and 2012.On December 31,2013,total cash dividends of $400,000 were declared.The total amounts payable to preferred stockholders and common stockholders,respectively,are

People's Electric Company omitted all its preferred stock dividends indefinitely in an effort to improve liquidity.All of the company's cumulative preferred stock was affected.According to the Wall Street Journal,"Some interpreted the drastic action as a requisite for the cash-strapped utility to secure a new credit agreement....If the credit agreement falls through,the omission of preferred-stock dividends would suggest People's Electric is perilously close to filing for bankruptcy." What is cumulative preferred stock? Why is the omission of dividends on those shares a drastic action? If new bank financing is not obtained,why would the company have to consider declaring bankruptcy?

Match each definition with the correct term below. -Stock dividend

Start-up and organization costs

Match each definition with the correct term below. -Stock split

Bibb Corporation had the following stock outstanding for years 2010 through 2013: Preferred Stock-$100 par value,8 percent cumulative,10,000 shares authorized,4,000 shares issued and outstanding Common Stock-$20 par value,10,000 shares authorized,6,000 shares issued and outstanding Bibb paid $15,000,$30,000,$100,000,and $130,000 in cash dividends during 2010,2011,2012,and 2013,respectively. a.Calculate the total cash dividends received by owners of preferred and common stock and the dividends in arrears in each year. b.Now assume that the preferred stock is noncumulative rather than cumulative.Calculate the total cash dividends received by owners of preferred and common stock in each year.

A liability arises when the board of directors declares a stock dividend.

For accounting purposes,stated value is treated differently than par value.

Chambers Corporation had the following shares of stock outstanding on December 31,2013: Common stock,$100 par value,100,000 shares outstanding Preferred stock,8 percent,$200 par value,cumulative,10,000 shares outstanding Dividends were in arrears for 2011 and 2012. On December 31,2013,total cash dividends of $800,000 were declared.The total amounts payable to preferred stockholders and common stockholders,respectively,are

All of the following normally are found in a corporation's stockholders' equity section except