Exam 13: Corporations: Effects on Retained Earnings and the Income Statement

On January 1, 2013, Parquet Sales issued 40,000 shares of common stock at a price of $22 per share. The stock has a par value of $1.00 per share. In mid-2014, due to dramatic increases in profits, the stock reached a market value of $90 per share. The board of directors approved a 2-for-1 stock split. After the stock split, what will the balance sheet show as the number of shares issued?

A corporation originally issued $5 par value stock for $6 per share. Which of the following would be included in the entry to record the purchase of 200 shares of treasury stock for $8 per share?

On December 1, 2013, Arbor Company had 20,000 shares of $1 par value common stock issued and outstanding. The next day they distributed a 50% stock dividend. The market value of the stock on that date was $9 per share. Please provide the journal entry for the transaction.

If a company retires preferred stock, which of the following is TRUE?

Please refer to the following information for Peartree Company: • Common stock, $1.00 par, 100,000 issued, 95,000 outstanding • Paid-in capital in excess of par: $2,150,000 • Retained earnings: $910,000 • Treasury stock: 5,000 shares purchased at $20 per share - If Peartree resold 1,000 shares of treasury stock for $24 per share, which of the following statements would be TRUE?

Which of the following would be a reason for a company to restrict its cash dividends or treasury stock purchases?

Which of the following is a common reason for companies to retire preferred stock?

At January 1, 2014, Foxmore Company had 80,000 shares of common stock outstanding and no preferred stock. During the year, they issued 40,000 additional shares of common stock. At December 31, 2014, Foxmore had 120,000 shares of common stock outstanding, and no preferred stock. In addition, Foxmore reported the following results for the year 2014: Sales revenues from regular business operations \ 3,000,000 Cost of goods sold 900,000 Operating expenses from their regular business operations 600,000 Gain on disposal of several items of property, plant \& equipment 15,000 Income tax expense on continuing operations 330,000 Loss on the termination of a discontinued business segment, net of Lax 120,000 Losses on damage caused by earthquake, net of tax 280,000 - At December 31, 2014, how much is the earnings per share for income (loss) from discontinued operations? (Please round all calculations to the nearest cent.)

Gordon Corporation reported the following equity section on its current balance sheet. The common stock is currently selling for $11.50 per share. Common stock, \ 5 par, 100,000 shares authorized, 40,000 shares issued \ 200,000 Paid in capital in excess of par-common 120,000 Retained earnings Total stockholders' equity \ - What will the total number of shares issued be after the declaration of a 10% stock dividend?

Which of the following will decrease the balance in Retained earnings?

Please refer to the following information for Peartree Company: • Common stock, $1.00 par, 100,000 issued, 95,000 outstanding • Paid-in capital in excess of par: $2,150,000 • Retained earnings: $910,000 • Treasury stock: 5,000 shares purchased at $20 per share - If Peartree purchases an additional 1,000 shares of treasury stock at $18 per share, what amounts will be shown for the number of shares issued and outstanding?

Which of the following will decrease the balance in Retained earnings?

Which of the following will decrease the amount of Total stockholders' equity?

At January 1, 2013, Foxmore Company had 80,000 shares of common stock outstanding and no preferred stock. During the year, they issued 40,000 additional shares of common stock. At December 31, 2013, Foxmore had 120,000 shares of common stock outstanding, and no preferred stock. In addition, Foxmore reported the following results for the year 2013: Sales revenues from regular business operations \ 3,000,000 Cost of goods sold 900,000 Operating expenses from their regular business operations 600,000 Gain on disposal of several items of property, plant \& equipment 15,000 Income tax expense on continuing operations 330,000 Loss on the termination of a discontinued business segment, net of Lax 120,000 Losses on damage caused by earthquake, net of tax 280,000 - Please prepare a multi-step income statement from the above data. Do not include earnings per share information. Foxmore Company Income Statement Year Ended December 31, 2013

RT Corp. shows a loss from flooding of $235,000 for the year. Flooding is not uncommon in the area, and so this loss will be included in operating income.

Which of the following occurs when a 2-for-1 stock split is declared?

Rakish Co. purchases 3,500 shares of the company's $6 par value common stock for $8 per share. It later sells 2,000 shares for $12 per share. Which of the following is the correct journal entry to record this transaction?

Rakish Co. purchases 3,500 shares of the company's $6 par value common stock for $8 per share. It later sells 2,000 shares for $12 per share. Please provide the journal entry for the sale of the treasury stock.

Stock dividends are distributed to stockholders in proportion to the number of shares each stockholder already owns.

A corporation closes a facility and moves to a new location. How would a loss on the disposal of the equipment at the closed facility be reported on an income statement?