Exam 13: Equity Financing

Taylor Company paid cash dividends totaling $150,000 in 2012 and $75,000 in 2013.In 2014,Taylor intends to pay cash dividends of $800,000.Compute the amount of cash dividends per share to be received by common stockholders in 2014 under each of the following assumptions.Treat each case independently.There were no dividends in arrears as of January 1,2012. (1)25,000 shares of common; 100,000 shares of 6 percent,$50 par cumulative preferred. (2)25,000 shares of common; 50,000 shares of 6 percent,$50 par noncumulative preferred. (3)25,000 shares of common; 70,000 shares of 6 percent,$100 par cumulative preferred.

On February 24,Bramlett Company purchased 4,000 shares of Delaney Corp.'s newly issued 6 percent cumulative $75 par preferred stock for $304,000.Each share carried one detachable stock warrant entitling the holder to acquire at $10 one share of Delaney no-par common stock.On February 25,the market price of the preferred stock was $72 per share,and the market price of the stock warrants was $8 per warrant.On December 29,Bramlett sold all the stock warrants for $41,000.The gain on the sale of the stock warrants was

Farnon Company has not declared or paid dividends on its cumulative preferred stock in the last three years.These dividends should be reported

Porter Corporation holds 10,000 shares of its $10 par common stock as treasury stock,which was purchased in 2013 at a cost of $140,000.On December 10,2014,Porter sold all 10,000 shares for $260,000.Assuming that Porter used the cost method of accounting for treasury stock,this sale would result in a credit to

Statement of Financial Accounting Standards No.160,"Noncontrolling Interests in Consolidated Financial Statements: An Amendment of ARB No.51",requires that the amount of equity interest provided by outside shareholders of subsidiaries that are not 100 %-owned by the parent company requires this amount be shown as

On December 31,2014,the stockholders' equity section of Pierce Co.was as follows: On March 31,2015,Pierce declared a 10 percent stock dividend,and accordingly 1,800 additional shares were issued,when the fair market value of the stock was $16 per share.For the three months ended March 31,2015,Pierce sustained a net loss of $64,000.The balance of Pierce's Retained Earnings as of March 31,2015,should be

A company issued rights to its existing shareholders to purchase,for $30 per share,unissued shares of $15 par value common stock.When the rights lapse,

How would the declaration of a 20 percent stock dividend by Astros Corporation affect each of the following on Astros' balance sheet? Retained Total Stock-

A company issued rights to its existing shareholders to acquire,at $15 per share,5,000 unissued shares of common stock with a par value of $10 per share.Common Stock will be credited at

Which of the following is NOT one of the basic shareholders rights?

Which of the following features of preferred stock would most likely be opposed by common shareholders?

On August 1,2014,B.Amherst Company reacquired 4,000 shares of its $15 par value common stock for $18 per share.Amherst uses the cost method to account for treasury stock.What journal entry should Amherst make to record the acquisition of treasury stock?

Cash dividends on the $10 par value common stock of Harland Company were as follows: •The 4th quarter cash dividend was declared on December 20,2014,to stockholders of record on December 31,2014.Payment of the 4th quarter dividend was made on January 9,2015. •In addition,Harland declared a 5 percent stock dividend on its $10 par value common stock on December 1,2014,when there were 150,000 shares issued and outstanding and the market value of the common stock was $20 per share.The shares were issued on December 1,2014. What was the effect on Harland's stockholders' equity accounts as a result of the 2014 dividend transactions?

The stockholders' equity section of Sliver Corporation's balance sheet at December 31,2014,was as follows: On January 2,2015,Sliver purchased and retired 100,000 shares of its stock for $1,800,000.Sliver records treasury stock using the par value method.Immediately after retirement of these 100,000 shares,the balances in the additional paid-in capital and retained earnings accounts should be

A company issued rights to its existing shareholders to purchase for par unissued shares of common stock with a par value of $10 per share.When the market value of the common stock was $12 per share,the rights were exercised.Common Stock should be credited at $10 per share and

Oleander Corporation was organized on January 3,2014,with authorized capital of 100,000 shares of $10 par common stock.During 2014,Oleander had the following transactions affecting stockholders' equity: •January 7--Issued 40,000 shares at $12 per share •December 2--Purchased 6,000 shares of treasury stock at $13 per share The cost method was used to record the treasury stock transaction.Oleander's net income for 2014 is $300,000.What is the amount of stockholders' equity at December 31,2014?

The following amounts were taken from the income statement of Tarpon Springs Company for the year ending December 31, 2014: Income from discontinued operations: In addition, Tarpon Springs reported the following items (all items are before taxes): The tax rate on all items is 40%. -Prepare a statement of comprehensive income in a one-statement format.

Current financial accounting standards require

On January 1,2013,Delgado Company establishes a stock option plan that grants 100 qualified managers options for a computed number of shares of $20 par-value common stock at a computed option price per share.The exercise price is $40,the market price of the company's common stock on the grant date.Computation of the number of options awarded will be made three years after the option is granted and is based on the increase in net income over the three-year period using the following formula: Number of options = 1,000 * (1 + growth rate of earnings per share from 2012 to 2015)= 1,000 * (1 + EPS in 2015/EPS in 2012)The options are nontransferable and must be exercised not earlier than three years,nor later than five years,from the grant date.Employment with the company is required through the exercise date.For simplicity,it is assumed that all the vested options are exercised near the end of 2017,when the price of the stock was $70. Management estimates that earnings growth over the three-year period will be approximately 25 percent.Forfeitures are estimated to be approximately 2 percent per year from the grant date to the vesting date.Use of an option pricing model yields a fair value for the options of $10 per option. At December 31,2013,earnings per share have grown 10 percent over the 2012 EPS.Management,however,continues to believe that the 25 percent growth amount over the three-year period is accurate.Two of the grantees have left the firm.The stock price has increased to $44 per share. At December 31,2014,no changes in estimates are made,even though earnings growth for the two-year period is only 15 percent.Market price per share has increased to $51 per share.An additional three grantees have left the company. At December 31,2015,the three-year growth in earnings is only 20 percent.Only 90 of the grantees are still with the company,and these individuals vest with their options.The stock price is now $48 per share. All vested options are exercised on December 28,2017,when the market price of the company's stock is $70 per share. Required: Prepare all journal entries necessary to account for this stock compensation plan.

Waltham Corporation was organized on January 2 with 100,000 authorized shares of $10 par value common stock.During the year,Waltham had the following capital transactions: •January 5 -- issued 75,000 shares at $14 per share •December 27 -- purchased 5,000 shares at $11 per share Waltham used the par value method to record the purchase of the treasury shares. What would be the balance in the paid-in capital from treasury stock account at December 31?