Exam 13: Equity Financing

The stockholders' equity section of Angus Corporation as of December 31,2014,contained the following accounts: Angus's board of directors declared a 10 percent stock dividend on April 1,2015,when the market value of the stock was $7 per share.Accordingly,1,000 new shares were issued.All of Angus's stock has a par value of $3 per share.Assuming Angus sustained a net loss of $12,000 for the quarter ended March 31,2015,what amount should Angus report as retained earnings as of April 1,2015?

When a property dividend is declared and the market value of the property exceeds its book value,the excess is credited to

Gains and losses on the purchase and resale of treasury stock may be reflected only in

Which of the following presentation formats is permitted by Statement of Financial Accounting Standards No.130,"Reporting Comprehensive Income"? I.A single statement of income and comprehensive income. II.Two statements of income,a traditional income statement ending with net income,and a second statement beginning with net income,all the elements of comprehensive income,and a total of comprehensive income. III.Within the statement of changes in stockholders' equity.

The following information pertains to Hermosa Corp.for the year ended September 30,2014: Prepare a statement of retained earnings for Hermosa Corp.for the year ended September 30,2014.

When a dividend is declared and paid in stock,

The Erhardt Corporation was incorporated on January 1,2014,with the following authorized capitalization: •40,000 shares of common stock,no par value,stated value $40 per share •10,000 shares of 5 percent cumulative preferred stock,par value $10 per share During 2014,Erhardt issued 34,000 shares of common stock for a total of $1,700,000 and 6,000 shares of preferred stock at $16 per share.In addition,on December 20,2014,subscriptions for 2,000 shares of preferred stock were taken at a purchase price of $17.These subscribed shares were paid for on January 2,2015.What should Erhardt report as total contributed capital on its December 31,2014,balance sheet?

Chase Co.owned 30,000 common shares of Sanborn Corporation purchased in 2008 for $540,000.On September 20,2014,Chase declared a property dividend of 1 share of Sanborn for every 5 shares of Chase stock held by a stockholder.On that date,there were 50,000 common shares of Chase outstanding,and the market value of Sanborn shares was $30 per share.The entry to record the declaration of the property dividend would include a debit to Retained Earnings of

On September 1,2014,Clownfish Corporation declared and issued a 15 percent common stock dividend.Prior to this date,Clownfish had 25,000 shares of $2 par value common stock that were both issued and outstanding.The market value of Clownfish' stock was $20 per share at the time the dividend was issued.As a result of this stock dividend,Clownfish' total stockholders' equity

On January 1,2014,the records of the Marathon Corporation showed these balances: During 2014 and 2015,these transactions occurred: Provide the entries to record the declaration and payment of the stock dividends during 2014 and 2015.

On March 2,2014,Burton Corporation issued 4,000 shares of 6 percent cumulative $100 par value preferred stock for $434,000.Each preferred share carried one nondetachable stock warrant which entitled the holder to acquire,at $17,one share of Burton $10 par common stock.On March 2,2014,the market price of the preferred stock (without warrants)was $90 per share and the market price of the stock warrants was $15 per warrant.The amount credited to Paid-In Capital in Excess of Par-Preferred by Burton on the issuance of the stock was

On July 23,Amigo Company declared a cash dividend totaling $80,000.Stockholders were notified that $15,000 of this dividend represented a liquidating dividend.At the time,the balance in Paid-In Capital in Excess of Par was $113,000. Make the journal entries to record (1)the declaration and (2)the payment of this dividend.

How would the declaration of a liquidating dividend by a corporation affect each of the following?

When treasury stock is purchased for cash at more than its par value,what is the effect on total stockholders' equity under each of the following methods?

An adjustment to retained earnings as a result of a conversion of preferred stock to common stock most likely would occur when

The entry to record the issuance of common stock for fully paid stock subscriptions is

The Rand Company wants to raise additional equity capital.The company decides to issue 5,000 shares of $25 par preferred stock with detachable warrants.The package of the stock and warrants sells for $105.Each warrant enables the holder to purchase two shares of $10 par common stock at $30 per share.Immediately following the issuance of the stock,the stock warrants are selling at $14 each.The market value of the preferred stock without the warrants is $96. (1)Prepare a journal entry for Rand Company to record the issuance of the preferred stock and the detachable warrants. (2)Assuming that all the warrants are exercised,prepare a journal entry for Rand to record the exercise of the warrants. (3)Assuming that only 70 percent of the warrants are exercised,prepare a journal entry for Rand to record the exercise and expiration of the warrants.

Unlike a stock split,a stock dividend requires a formal journal entry in the financial accounting records because stock dividends

Undistributed stock dividends should be reported as

On February 1,authorized common stock was sold on a subscription basis at a price in excess of par value,and 20 percent of the subscription price was collected.On May 1,the remaining 80 percent of the subscription price was collected.Additional Paid-In Capital would increase on