Exam 8: Accounting for Shareholders Equity

Marquise Corporation had a return on equity of 18%.The company had net income during the year of $147,000.There were 98,000 shares of common stock outstanding throughout the year and no preferred stock at any time.Calculate average common shareholders' equity (round to the nearest cent).

Gains from treasury stock transactions increase net income.

Use the information below to answer the following question: How many shares of common stock are outstanding?

The date of payment is the date ________.

Discuss the ownership rights available to common shareholders.

Which of the following will increase a company's retained earnings?

Net income divided by average common shareholders' equity is the ________.

Team Shirts issued a 2-for-1 stock split.Before the split,Team Shirts had 100,000,$1 par value common shares outstanding.After the split,the par value of each common share is ________.

Romax Company had net income of $147,000.The balance sheet showed beginning and ending balances in shareholders' equity of $750,000 and $790,000,respectively.There were 69,000 common shares outstanding and no preferred stock.Calculate return on equity.

Stock in the hands of shareholders is called ________ stock.

Retained earnings are ________.

Team Shirts issued 20,000 shares of stock for $20 per share.The par value of the stock was $1 per share.Calculate the value of capital stock and additional paid-in capital.

Paid-in capital is divided into capital stock and retained earnings.

Which of these will decrease the par value of a corporation's common stock?

Retained earnings is also known as paid-in capital.

Team Shirts purchased $5,000 worth of its own stock in the stock market.The transaction would _________ cash by $5,000 and _________ shareholders' equity by $5,000.

Identify each of the following actions taken by the board of directors of Gem's Jewelers.Each term is used only once. a.stock split b.declaration date c.treasury stock d.issued stock e.dividends in arrears ______ 1.Authorized payment of back dividends to preferred shareholders ______ 2.Authorized the sale of 500 new shares of stock to the public ______ 3.Authorized the repurchase of 500 shares of Gem's Jewelers stock ______ 4.Authorized the exchange of two new shares of stock for every one existing share ______ 5.Authorized the payment of a cash dividend on March 15

Outstanding stock has been issued and is either in the hands of shareholders or held by a corporation as treasury stock.

Cartier,Inc.'s corporate charter authorizes it to sell 1 million shares of $0.50 par value common stock.As of December 31,2011,the company had sold 500,000 shares for $4 each.Cartier has 20,000 shares of treasury stock that cost $100,000.On the December 31,2011 balance sheet,the number of shares issued is ________ shares.

On July 31,Ace Electronics paid a cash dividend of $0.50 per share to common shareholders.There were 80,000 shares issued at the time.Ace held 5,000 shares of treasury stock.Ace also paid a dividend to preferred shareholders.There were 1,000 shares of 6%,$100 par preferred stock outstanding.What was the total dollar amount of the cash dividend?