Exam 8: Accounting for Shareholders Equity

Anika Braun,owner and CEO of Braun's Sports Den,believes that the corporation has too many shares outstanding.She is worried that a Japanese company will buy the shares and take over the business.Her accountant has suggested that Braun's Sports Den buy treasury stock.Explain to Anika why buying treasury stock may be an option.

Excess,Inc.'s corporate charter allows it to sell 200,000 shares of $1 par value common stock.During 2011,its first year of business,it sold 30,000 shares of its common stock at $8 per share.Net income for 2011 was $15,000 and dividends of $4,000 were declared.It repurchased 100 shares of its stock for $9 per share. Required: Complete both the statement of changes in shareholders' equity and the shareholders' equity section of the balance sheet.

Team Shirts repurchased $3,700 worth of its stock via the stock market.This purchase ________.

Lance Corporation had a return on equity of 20%.The company earned net income of $2,500,000 during the year.There were 200,000 shares of common stock outstanding throughout the year and no preferred stock at any time.Calculate average common shareholders' equity.

When a company buys additional shares of treasury stock during a year when it does not issue any additional shares of common stock,its earnings per share will most likely increase.

Net income minus preferred dividends,divided by the weighted average number of common shares outstanding is the ________.

Dividends are an operating expense of a corporation.

Out of Africa had the following shareholders' equity section on its balance sheet as of December 31. Calculate the following: a.Number of shares of preferred stock outstanding b.Number of shares of common stock outstanding

Trading Places,a multi-national corporation,had a very successful year.The board of directors declared and paid a cash dividend of $50,000.The prior year,Trading Places did not pay dividends on its 400 shares of noncumulative,8%,$100 par,preferred stock.How much of the cash dividend was paid to the PREFERRED shareholders?

Use the information below to answer the following question: How many shares of common stock have been issued?

DM Company had beginning retained earnings of $60,000.During the year the company had net income of $275,000 and declared and paid dividends of $7,500.The ending balance in retained earnings is ________.

Discuss the types of business risks associated with equity financing.

Treasury stock is a company's own stock that the company has repurchased.

Use the information below to answer the following question: Common stock,$1 par,100,000 shares This information is part of the company's ________.

Earnings per share is ________.

Use the following information for Equitable,Inc.to answer the following question(s).Equitable issued no new common stock and had 100,000 common shares issued and outstanding during 2011.Equitable has no preferred stock. What was earnings per share for the year ended December 31,2011?

Analyze each of the following items.Indicate on which financial statement each would appear.Some items may appear on more than one financial statement. a.income statement b.balance sheet c.statement of changes in shareholders' equity ______ 1.net income ______ 2.treasury stock ______ 3.dividends ______ 4.authorized stock ______ 5.paid-in capital

The management of Krupt,Inc.issued two shares of $0.50 par value common stock in exchange for each share of all common shareholder's $1.00 par value stock.What effect will this have on total shareholders' equity? What is this practice called? Is this ethical?

Team Shirts had a return on equity of 23%.Average shareholders' equity for the corporation was $123,000.There were 45,000 common shares and no preferred shares outstanding.What was net income for the year?