Exam 13: Equity Financing

The Mailer Corporation had the following classes of stock outstanding as of December 31,2014: Common stock,$20 par value,20,000 shares outstanding Preferred stock,6 percent,$100 par value,cumulative,2,000 shares outstanding No dividends were paid on preferred stock for 2012 and 2013.On December 31,2014,a total cash dividend of $200,000 was declared.What are the amounts of dividends payable on both the common and preferred stock,respectively?

The stockholders' equity section of Pisano Corp.is presented below. Complete the following table to depict the number of shares of stock and balances in the stockholders' equity accounts after each of the following transactions.Each situation is to be considered independently of the others. (a)15 percent stock dividend,market value $25 per share (b)2-for-1 stock split (c)100 percent stock dividend,market value $25 per share

On January 2,2014,Sanders Corporation granted stock options to key employees for the purchase of 60,000 shares of the company's common stock at $25 per share.The options are intended to compensate employees for the next two years.The options are exercisable within a four-year period beginning January 1,2016,by grantees still in the employ of the company.The fair value of the option determined by an option pricing model is $7 at the grant date.Sanders plans to distribute up to 60,000 shares of treasury stock when options are exercised.The treasury stock was acquired by Sanders at a cost of $28 per share and was recorded under the cost method.Assume that no stock options were terminated during the year.How much should Sanders charge to Compensation Expense for the year ended December 31,2014?

During 2014,the following transactions related to the capital stock of the Landline Corp.occurred: Provide the entries to record the above transactions.

The following was abstracted from the accounts of the Aspen Corp.at year-end: What should be the current balance of Retained Earnings?

The issuance of shares of preferred stock to shareholders

Select the statement that is incorrect concerning the appropriations of retained earnings.

On December 10,Vandalia Co.split its stock 5-for-2 when the market value was $49 per share.Prior to the split,Vandalia had 250,000 shares of $15 par value stock.After the split,Vandalia's outstanding shares would be

The following data are extracted from the stockholders' equity section of the balance sheet of Guthrie Corporation: During 2014,the corporation declared and paid cash dividends of $7,500 and also declared and issued a stock dividend.There were no other changes in stock issued and outstanding during 2014.Net income for 2014 was

When a portion of stockholders' original investment is returned in the form of a dividend,it is called a

Stock warrants outstanding should be classified as

On January 1,2013,Venice Company initiated a stock incentive plan for many employees.The plan provides for each qualified executive to receive options for 2,000 shares of common stock.The option is exercisable at any time after four years and prior to expiration,which is five years from the date of grant.Employment with the company is required through the exercise date.The options are not transferable and the specified exercise price is set equal to the grant date market price of the stock.Compensation cost is to be assigned equally to each year from the grant date to the first exercise (vesting)date,which is four years.The company uses SFAS No.123R to account for stock-based compensation plans. On January 1,2016,1,000 employees were each granted options to acquire 2,000 shares under the plan when the market price of the stock was $30.Management expects a forfeiture rate of approximately 4 percent per year over the service period.Application of an option pricing model results in a fair value of each option at the grant date of $12 per option. At December 31,2016,840 grantees are still employed by the company and will vest with 2,000 options each.All vested options are exercised on December 28,2017,prior to their expiration on December 31,2017.The market price of the stock on December 28,2017,was $50 per share. Required: Prepare all entries necessary to account for this stock option plan.Assume that all compensation expense is expensed in each period rather than being held back as part of inventory cost.

On November 10,Linden Co.split its stock 5-for-2 when the market value was $55 per share.Prior to the split,Linden had 300,000 shares of $15 par value stock.After the split,the par value of the stock was

Which of the following is issued to shareholders by a corporation as evidence of the ownership of rights to acquire its unissued or treasury stock?

Indicate how each of the following transactions would be reflected in a statement of cash flows: (1)Cash dividends declared and paid during the year. (2)A 10 percent stock dividend declared and distributed during the year. (3)A 50 percent stock dividend declared and distributed during the year. (4)A property dividend declared and distributed during the year. (5)A retained earnings appropriation made during the year.

Meower Corp.received a charter authorizing 120,000 shares of common stock at $15 par value per share.During the first year of operations,40,000 shares were sold at $28 per share.600 shares were issued in payment of a current operating debt of $18,600.In the first year,the net income was $142,000. During the year,dividends of $46,000 were paid to stockholders.At the end of the year,total liabilities were $82,000.Use the given data to compute the following items at the end of the first year (show all computations): (1)Total liabilities and stockholders' equity (2)Stockholders' equity (3)Contributed capital (4)Issued capital stock (par)(5)Outstanding capital stock (par)(6)Unissued capital stock (number of shares)(7)Paid-In capital in excess of par value

Which of the following shareholder rights is most commonly enhanced in an issue of preferred stock?