Question 1

Assume that a company issued 10,000 shares for $30/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Accepted Answer

A)  Debit to common shares for $28,000. 
B)  Debit to common shares for $30,000. 
C)  Credit to contributed surplus for $29,000. 
D)  Credit to contributed surplus for $1,000. 
A)  Debit to common shares for $28,000. 
B)  Debit to common shares for $30,000. 
C)  Credit to contributed surplus for $29,000. 
D)  Credit to contributed surplus for $1,000.

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Investors favor purchasing preferred shares. 
B)  All outstanding shares are eligible to vote for the board of directors. 
C)  The value of preferred shares can be higher or lower than that of common shares. 
D)  Common shares always have voting rights. 
A)  Investors favor purchasing preferred shares. 
B)  All outstanding shares are eligible to vote for the board of directors. 
C)  The value of preferred shares can be higher or lower than that of common shares. 
D)  Common shares always have voting rights.

Question 3

Which statement best describes the accounting when a company cancels its own shares at an amount lower than the average share value?

Accepted Answer

A)  Contributed surplus and retained earnings will be credited. 
B)  Contributed surplus and retained earnings will be debited. 
C)  Contributed surplus will be credited, thereby increasing equity. 
D)  Contributed surplus will be debited, thereby decreasing equity. 
A)  Contributed surplus and retained earnings will be credited. 
B)  Contributed surplus and retained earnings will be debited. 
C)  Contributed surplus will be credited, thereby increasing equity. 
D)  Contributed surplus will be debited, thereby decreasing equity.

Question 4

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

Accepted Answer

A)  Appropriated reserves. 
B)  Unappropriated retained earnings. 
C)  Contributed surplus. 
D)  Accumulated other comprehensive income. 
A)  Appropriated reserves. 
B)  Unappropriated retained earnings. 
C)  Contributed surplus. 
D)  Accumulated other comprehensive income.

Question 5

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

Accepted Answer

A)  This method decreases the contributed surplus when the repurchased shares are later resold. 
B)  This method has the same effect on contributed surplus to that of the two transaction method. 
C)  This method treats the reacquisition and subsequent sale as one cycle for accounting. 
D)  This method increases contributed surplus at the time of repurchase. 
A)  This method decreases the contributed surplus when the repurchased shares are later resold. 
B)  This method has the same effect on contributed surplus to that of the two transaction method. 
C)  This method treats the reacquisition and subsequent sale as one cycle for accounting. 
D)  This method increases contributed surplus at the time of repurchase.

Question 6

Here is an extract of a trial balance for Lipika Inc.Indicate which accounts would be reported under the "retained earnings" section of the balance sheet.

Accepted Answer

@#IMG-DLM&_TB1321_00

Question 7

Which statement about "stock dividends" is correct?

Accepted Answer

A)  Only a memo entry is needed for this transaction. 
B)  No entry is needed in the accounting records. 
C)  A journal entry is needed for this transaction. 
D)  This is the same as a stock split for accounting purposes. 
A)  Only a memo entry is needed for this transaction. 
B)  No entry is needed in the accounting records. 
C)  A journal entry is needed for this transaction. 
D)  This is the same as a stock split for accounting purposes.

Question 8

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

Accepted Answer

A)  $ 0 
B)  $2,750 
C)  $107,250 
D)  $110,000 
A)  $ 0 
B)  $2,750 
C)  $107,250 
D)  $110,000

Question 9

Which is an example of "contributed capital"?

Accepted Answer

A)  Appropriated reserves. 
B)  Unappropriated retained earnings. 
C)  Common shares. 
D)  Accumulated other comprehensive income. 
A)  Appropriated reserves. 
B)  Unappropriated retained earnings. 
C)  Common shares. 
D)  Accumulated other comprehensive income.

Question 10

Nala Company has two classes of shares that were both issued on January 1,2015:
Class A,$10 par value,8% preferred shares,2,750,000 shares issued and outstanding;
Class B,no par value common shares issued at $30/share,1,300,000 shares issued and outstanding.
Due to challenging start-up problems in 2015 and 2016 there were no dividends paid; in 2017 dividends of $8,000,000 were paid; and,for 2018,dividends paid totaled $16,000,000.
Required:
How much was the amount of dividends paid to preferred and common shares in 2015 to 2018? First assume that the preferred shares are non-cumulative,then assume that they are cumulative.
NC = Non-cumulative
C = Cumulative
P/S = Preferred shares
C/S = Common shares

Accepted Answer

@#IMG-DLM&_TB1321_00_TB1321_00_TB1321_00 If prefer

Question 11

What is the meaning of "shares authorized," "shares issued," and "shares outstanding"?

Accepted Answer

shares authorized: The number of shares

Question 12

Explain the meaning of "par value," "contributed surplus," and "preferred shares."

Accepted Answer

par value shares: Shares with a dollar v

Question 13

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 are 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?

Accepted Answer

a.Either the stock dividend or stock spl

Question 14

Below are details relating to balances for the equity accounts of Paras 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 31,2017

Accepted Answer

Paras Company Ltd.
Statement o

Question 15

Which statement is correct respecting a company's repurchase of its own shares?

Accepted Answer

A)  It provides a tax disadvantage to the shareholder. 
B)  It enables the company to acquire stock for distribution as compensation to employees. 
C)  It provides a negative signal to the market. 
D)  It causes earnings per share to decrease. 
A)  It provides a tax disadvantage to the shareholder. 
B)  It enables the company to acquire stock for distribution as compensation to employees. 
C)  It provides a negative signal to the market. 
D)  It causes earnings per share to decrease.

Question 16

What is a "stock split"?

Accepted Answer

A)  It is an increase in the number of shares issued for which book value consideration is received from investors. 
B)  It is an increase in the number of shares issued for which no consideration is received from investors. 
C)  It is an increase in the number of shares issued for which par value consideration is received from investors. 
D)  It is an increase in the number of shares issued for which market value consideration is received from investors. 
A)  It is an increase in the number of shares issued for which book value consideration is received from investors. 
B)  It is an increase in the number of shares issued for which no consideration is received from investors. 
C)  It is an increase in the number of shares issued for which par value consideration is received from investors. 
D)  It is an increase in the number of shares issued for which market value consideration is received from investors.

Question 17

Assume that a company issued 10,000 shares for $30 and a par value of $2/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Accepted Answer

A)  Debit to common shares for $2,000. 
B)  Debit to common shares for $28,000. 
C)  Debit to contributed surplus for $1,000. 
D)  Credit to contributed surplus for $1,000. 
A)  Debit to common shares for $2,000. 
B)  Debit to common shares for $28,000. 
C)  Debit to contributed surplus for $1,000. 
D)  Credit to contributed surplus for $1,000.

Question 18

Which statement about the "ex-dividend date" is correct?

Accepted Answer

A)  The ex-dividend date relates only to shares that are publicly traded. 
B)  An investor who buys shares before the ex-dividend date does not have the right to receive a dividend that has been declared. 
C)  The ex-dividend date will occur after the record date. 
D)  An investor who buys shares on or after the ex-dividend date has the right to receive a dividend that has been declared. 
A)  The ex-dividend date relates only to shares that are publicly traded. 
B)  An investor who buys shares before the ex-dividend date does not have the right to receive a dividend that has been declared. 
C)  The ex-dividend date will occur after the record date. 
D)  An investor who buys shares on or after the ex-dividend date has the right to receive a dividend that has been declared.

Question 19

When a corporation engages in a capital transaction (those relating to its contributed capital),the journal entry may involve either a debit or a credit to contributed surplus.While not permitted by accounting standards,if these debits or credits were to be recognized through income,a debit would be called a "loss" and a credit would be called a "gain."
Consider the following sequence of transactions:
• Jan.1,2012: Company issues 1,500,000 no par common shares at $14 each.
• Jan.1,2018: Company reacquires 150,000 common shares in the open market at $9 each,and cancels them immediately.
There were no other capital transactions and the company had not paid any dividends.
Required:
a.Prepare the journal entries for the two transactions.
b.Review the journal entry for January 1,2018.How much was credited other than cash? Does this credit reflect good or bad management? As a shareholder,would you be happy or unhappy about this credit entry?
c.What would have been the journal entry for January 1,2018 had the repurchase price been $24?
d.In the journal entry for part (c),explain why the debit goes to reduce retained earnings.How would a shareholder interpret the reduction in retained earnings?

Accepted Answer

a.
 @#IMG-DLM&_TB1321_00_TB1321_00_TB1321_00 b.The

Question 20

Which of the following statements is correct?

Accepted Answer

A)  Only a memo entry is needed for stock dividends transactions. 
B)  The date of record of cash dividends is the date when the funds for the dividend are transferred to shareholders 
C)  The ex-dividend date relates only to shares that are publicly traded. 
D)  A company will record dividends payable on the ex-dividend date. 
A)  Only a memo entry is needed for stock dividends transactions. 
B)  The date of record of cash dividends is the date when the funds for the dividend are transferred to shareholders 
C)  The ex-dividend date relates only to shares that are publicly traded. 
D)  A company will record dividends payable on the ex-dividend date.

Assume that a company issued 10,000 shares for $30/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Which of the following statements is correct?

Which statement best describes the accounting when a company cancels its own shares at an amount lower than the average share value?

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

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

Here is an extract of a trial balance for Lipika Inc.Indicate which accounts would be reported under the "retained earnings" section of the balance sheet.

Which statement about "stock dividends" is correct?

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

Which is an example of "contributed capital"?

What is the meaning of "shares authorized," "shares issued," and "shares outstanding"?

Explain the meaning of "par value," "contributed surplus," and "preferred shares."

Below are details relating to balances for the equity accounts of Paras 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 31,2017

Which statement is correct respecting a company's repurchase of its own shares?

What is a "stock split"?

Assume that a company issued 10,000 shares for $30 and a par value of $2/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Which statement about the "ex-dividend date" is correct?

Which of the following statements is correct?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Accounting Changes

Filters

Exam 3: Equities

Assume that a company issued 10,000 shares for $30/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Which of the following statements is correct?

Which statement best describes the accounting when a company cancels its own shares at an amount lower than the average share value?

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

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

Here is an extract of a trial balance for Lipika Inc.Indicate which accounts would be reported under the "retained earnings" section of the balance sheet.

Which statement about "stock dividends" is correct?

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

Which is an example of "contributed capital"?

What is the meaning of "shares authorized," "shares issued," and "shares outstanding"?

Explain the meaning of "par value," "contributed surplus," and "preferred shares."

Below are details relating to balances for the equity accounts of Paras 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 31,2017

Which statement is correct respecting a company's repurchase of its own shares?

What is a "stock split"?

Assume that a company issued 10,000 shares for $30 and a par value of $2/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Which statement about the "ex-dividend date" is correct?

Which of the following statements is correct?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Complex Financial Instruments

Earnings Per Share

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Accounting Changes

Filters