Question 1

Explain how to compute book value per common share and discuss how it can be used to analyze the financial condition of a corporation.

Accepted Answer

Book value per common share is calculate

Question 2

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Accepted Answer

A) True 
 B)False

Question 3

Changes in retained earnings are commonly reported in the:

Accepted Answer

A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of stockholders' equity. 
D) Multiple-step income statement. 
E) Single-step income statement. 
A) Statement of cash flows. 
B) Balance sheet. 
C) Statement of stockholders' equity. 
D) Multiple-step income statement. 
E) Single-step income statement.

Question 4

A corporation may be authorized to issue both common and preferred stock.

Accepted Answer

A) True 
 B)False

Question 5

Comfort Mattresses,Inc.sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share.The entry to record this transaction would be:

Accepted Answer

A) Debit Cash $312,000; credit Common Stock $26,000; credit Paid-in Capital in Excess of Par Value,Common Stock $286,000. 
B) Debit Cash for $312,000; credit Common Stock $312,000. 
C) Debit Common Stock $26,000; debit Paid-in Capital in Excess of Par Value,Common Stock $286,000; credit Cash $312,000. 
D) Debit Cash $312,000; credit Stock Liability $286,000; credit Common Stock $26,000. 
E) Debit Common Stock $26,000; credit Cash $26,000. 
A) Debit Cash $312,000; credit Common Stock $26,000; credit Paid-in Capital in Excess of Par Value,Common Stock $286,000. 
B) Debit Cash for $312,000; credit Common Stock $312,000. 
C) Debit Common Stock $26,000; debit Paid-in Capital in Excess of Par Value,Common Stock $286,000; credit Cash $312,000. 
D) Debit Cash $312,000; credit Stock Liability $286,000; credit Common Stock $26,000. 
E) Debit Common Stock $26,000; credit Cash $26,000.

Question 6

Dynasty Corporation had stockholders' equity on January 1 as follows: Common Stock,$5 par value,1,000,000 shares authorized,400,000 shares issued; Paid-in Capital in Excess of Par Value,Common Stock,$800,000; Retained Earnings,$3,600,000.Prepare journal entries to record the following transactions:

Accepted Answer

The answer of Dynasty Corporation had stockholders' equity on January...

Question 7

The price at which a share of stock is bought or sold is known as par value.

Accepted Answer

A) True 
 B)False

Question 8

Prior to May 1,Fortune Company has never had any treasury stock transactions.A company repurchased 100 shares of its common stock on May 1 for $5,000.On July 1,it reissued 50 of these shares at $52 per share.On August 1,it reissued the remaining treasury shares at $49 per share.What is the balance in the Paid-in Capital,Treasury Stock account on August 2?

Accepted Answer

A) $5,050. 
B) $2,600. 
C) $100. 
D) $50. 
E) $0. 
A) $5,050. 
B) $2,600. 
C) $100. 
D) $50. 
E) $0.

Question 9

Paid-in capital is the total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.

Accepted Answer

A) True 
 B)False

Question 10

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

Accepted Answer

A) 1.15. 
B) 0.87. 
C) 19.2. 
D) 10.0. 
E) 11.46. 
A) 1.15. 
B) 0.87. 
C) 19.2. 
D) 10.0. 
E) 11.46.

Question 11

Lafferty Corporation reported earnings per share of $9.75,paid a $6.00 cash dividend per share to preferred shareholders,and paid a $0.54 cash dividend per share to common shareholders.There were 10,000 shares of preferred stock outstanding and 600,000 shares of common stock outstanding during the year,and the market price per share of common stock was $41.60.Calculate the company's dividend yield for common stock.

Accepted Answer

Dividend Yield = Cash Dividend

Question 12

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the declaration of the cash dividend is:

Accepted Answer

A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
A) Debit Dividend Expense $12,000; credit Cash $12,000. 
B) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
C) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
D) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
E) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000.

Question 13

Corporations avoid many of the state regulations and controls that proprietorships and partnerships are subject to.

Accepted Answer

A) True 
 B)False

Question 14

Shareholders in a corporation have the power to bind the corporation to contracts.

Accepted Answer

A) True 
 B)False

Question 15

The date the directors vote to declare and pay a dividend is called the:

Accepted Answer

A) Date of stockholders' meeting. 
B) Date of declaration. 
C) Date of record. 
D) Date of payment. 
E) Liquidating date. 
A) Date of stockholders' meeting. 
B) Date of declaration. 
C) Date of record. 
D) Date of payment. 
E) Liquidating date.

Question 16

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

Accepted Answer

A) Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000. 
B) Debit Common Dividends Payable $95,000; credit Cash $95,000. 
C) Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000. 
D) Debit Common Dividends Payable $90,000; credit Cash $90,000. 
E) Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000. 
A) Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000. 
B) Debit Common Dividends Payable $95,000; credit Cash $95,000. 
C) Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000. 
D) Debit Common Dividends Payable $90,000; credit Cash $90,000. 
E) Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000.

Question 17

A dividend preference for preferred stock means that:

Accepted Answer

A) Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders. 
B) Preferred shareholders are guaranteed dividends. 
C) Dividends are paid quarterly. 
D) Preferred stockholders prefer dividends more than common stockholders. 
E) Dividends must be declared on preferred stock. 
A) Preferred stockholders are allocated their dividends before dividends are allocated to common shareholders. 
B) Preferred shareholders are guaranteed dividends. 
C) Dividends are paid quarterly. 
D) Preferred stockholders prefer dividends more than common stockholders. 
E) Dividends must be declared on preferred stock.

Question 18

A company has $200,000 of 10% noncumulative,nonparticipating,preferred stock outstanding,and $150,000 of common stock outstanding.In the company's first year of operation,no dividends were paid,but during the second year,it paid cash dividends of $25,000.Compute the dividends to be distributed to (1)preferred shares and (2)common shares.

Accepted Answer

(1)Preferred: 10% ×

Question 19

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of On September 20,Fletcher Corporation issued 25,000 shares...

Question 20

Alto Company issued 7% preferred stock with a $100 par value.This means that:

Accepted Answer

A) Preferred shareholders have a guaranteed dividend. 
B) The amount of the potential dividend is $7 per year per preferred share. 
C) Preferred shareholders are entitled to 7% of the annual income. 
D) The market price per share will approximate $100 per share. 
E) Only 7% of the total paid-in capital can be preferred stock. 
A) Preferred shareholders have a guaranteed dividend. 
B) The amount of the potential dividend is $7 per year per preferred share. 
C) Preferred shareholders are entitled to 7% of the annual income. 
D) The market price per share will approximate $100 per share. 
E) Only 7% of the total paid-in capital can be preferred stock.

Exam 11: Corporate Reporting and Analysis

Explain how to compute book value per common share and discuss how it can be used to analyze the financial condition of a corporation.

When no-par stock is not assigned a stated value,the total amount received is recorded in the Common Stock account.

Changes in retained earnings are commonly reported in the:

A corporation may be authorized to issue both common and preferred stock.

Comfort Mattresses,Inc.sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share.The entry to record this transaction would be:

Dynasty Corporation had stockholders' equity on January 1 as follows: Common Stock,$5 par value,1,000,000 shares authorized,400,000 shares issued; Paid-in Capital in Excess of Par Value,Common Stock,$800,000; Retained Earnings,$3,600,000.Prepare journal entries to record the following transactions:

The price at which a share of stock is bought or sold is known as par value.

Paid-in capital is the total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.

A company has earnings per share of $9.60.Its dividend per share is $0.50,its market price per share is $110,and its book value per share is $96.Its price-earnings ratio equals:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the declaration of the cash dividend is:

Corporations avoid many of the state regulations and controls that proprietorships and partnerships are subject to.

Shareholders in a corporation have the power to bind the corporation to contracts.

The date the directors vote to declare and pay a dividend is called the:

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

A dividend preference for preferred stock means that:

On September 20,Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000.Prepare the general journal entry to record this transaction.

Alto Company issued 7% preferred stock with a $100 par value.This means that:

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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