Exam 11: Stockholders Equity

The Treasury Stock account should be considered an asset account.

Explain the differences between a partnership and sole proprietorship.Include in your discussion whether either is considered a separate legal entity.

Which of the following statements regarding partnerships is true?

Select the best answer from the list below to complete statements that follow. Authorized shares treasury stock book value per share issued shares stock dividend par value per share outstanding shares additional paid-in-capital market value per share stock split dividend payout ratio retained earnings -The maximum number of shares a company may issue is the number of __________.

When stock is issued for a noncash asset,the par value of the stock is the best indicator of the value of the asset.

Abilene Western Shop began business on January 1,2017.The corporate charter authorized issuance of 10,000 shares of $2 par value common stock and 4,000 shares of $8 par value,6% cumulative preferred stock.Abilene issued 2,400 shares of common stock for cash at $20 per share on January 2,2017.What effect does the entry to record the issuance of stock have on total stockholders' equity?

Montana City Company began business on January 1,2017.The corporate charter authorized issuance of 500 shares of $1 par value common stock and 400 shares of $4 par value,3% cumulative preferred stock.What is the maximum amount that can be reported on the balance sheet for Common Stock and Preferred Stock,respectively,if all of the stock is issued? Common Stock Preferred Stock a. \5 00 \1 ,600 b. \5 ,000 \1 20 c. \5 00 \1 20 d. Not enough information provided.

Explain what amount is recorded in the Additional Paid-In Capital account when stock is issued.

A company would repurchase its own stock for all of the following reasons except

Several transactions occurred for Shadow Dreams Corporation during 2017.Indicate the effect each item has directly on retained earnings by writing the amount in the space provided.Place a + (plus sign)in front of the amount if the item increases retained earnings,or ( )parentheses around the amount if the item decreases retained earnings.Place an X in the blank for items that have no direct effect on retained earnings.(Items that affect the income statement do not directly affect retained earnings. ) A) $\underline{\quad\quad}$ A tomado completely destroyed the company's warehouse on March 1 . The original cost was $\$ 300,000$ , and the book value was $\$ 160,000$ on that date. The company had no insurance on the warehouse. B) $\underline{\quad\quad}$ Shadow Dreams earned net income in the amount of $\$ 450,000$ for the year ending December 31, 2017. C) $\underline{\quad\quad}$ Shadow Dreams declared and paid $\$ 320,000$ of cash dividends to common and preferred stockholders during 2017 .

The Retained Earnings account balance for a large corporation is $10,000,000.This amount represents

All of the following statements are true about a 3-for-1 split,except

The Stockholders' Equity section of Saltsburg Company's balance sheet on January 1,2017,appeared as follows: Common stock, \ 2 par, 2,000 shares issued and outstanding \ 4,000 Additional paid-in capital 1,600 Retained earnings Total stockholders' equity On March 1,2017,Saltsburg Company reacquired 800 shares of common stock at $12 per share.On April 6,Saltsburg Company resold 600 shares of treasury stock at $20 per share.How many shares of stock are outstanding at March 31,and April 30,respectively?

Walton Corporation shows the following in the Stockholders' Equity section of its balance sheet: The stated value of its common stock is $0.50,and the total balance in the Common Stock account is $37,500.Also noted is that 5,000 shares are currently designated as treasury stock.The number of shares outstanding is

The all-inclusive approach requires that all events and transactions that affect income should be reported on the income statement to help prevent the manipulation of income.

Authorized stock represents the

Given below are several transactions for Vision Inc.In the space provided,indicate the impact on each of the stockholders' equity accounts given,by placing the dollar amount and either a plus sign (+)or a minus sign (-)in the box provided.For each account in which there is no effect,place an X in the box. Transaction Common Stock Additional Paid-In Stock Retained Earnings 1. Vision Inc. received authorization to issue 1,000 shares of \ 2 par value common stock. 2. Vision Inc. issued 500 shares of common stock for cash at \ 15 per share. 3. Vision Inc. issued 200 shares in exchange for a truck worth \ 3,000. 4. Vision Inc. issued 100 shares of stock in exchange for a patent. The patent had an undeterminable market value. The stock was selling for \ 14 per share.

Bradford Parts reported the following information at December 31,2017: Preferred stock, 12\%,\ 1 par, 50,000 shares authorized, issued, and outstanding; cumulative; non-particip ating, call able at par value \ 50,000 Common stock \ 2 par, 30,000 shares authorized 40,000 Additional paid-in capital-common 50,000 Retained earnings 30,000 Total contributed capital and retained earnings \ 170,000 Less: Treasury stock (500 common shares at cost) Total stockholders' equity Answer the following questions for Bradford Parts by placing the correct response in the space provided. $\underline{\quad\quad}$ A) How many shares of common stock are issued? $\underline{\quad\quad}$ B) How many shares of preferred stock are issued? $\underline{\quad\quad}$ C) How many common shares are outstanding? $\underline{\quad\quad}$ D) How many preferred shares are outstanding? $\underline{\quad\quad}$ E) How many of the common shares will receive dividends if and when they are paid? $\underline{\quad\quad}$ F) How many of the preferred shares will receive dividends if and when they are paid?

When a company declares a 3-for-1 stock split,the number of outstanding shares

At December 31,2017,Corning Company has the following: Common Stock,$10 par,10,000 shares authorized,9,000 issued,8,000 outstanding Preferred Stock,$100 par,8%,cumulative,1,000 shares authorized,issued,and outstanding The company did not pay any dividend during 2016 or 2015. ​ Required Compute the amount of dividend to be received by the common and preferred stockholders in 2017 if the company declared a dividend of $60,000.