Exam 11: Stockholders Equity

A 2-for-1 stock split increases the par value per share.

Chad Jones established Jones' Cleaning Services,a sole proprietorship,by investing $1,000 on January 1,2017.During the first year of operations,the business generated net income of $42,000.The owner withdrew cash for personal use.The ending balance of the capital account was $20,000.Prepare Jones' statement of owner's equity for the year ended December 31,2017.

Book value indicates the rights that stockholders have,based on recorded values,to the net assets in the event of liquidation.

All issued stock is outstanding.

When stock is issued for cash,only the par value of the stock should be reported in the Stock account.

With regard to preferred stock,

Zelienople Co.reported the following information at December 31,2017: The number of shares of common stock issued is Preferred stock, \ 10 par, 5,000 shares authorized, cumulative \ 50,000 Common stock, \ 1 par, 500,000 shares authorized 200,000 Additional paid-in capital—common 25,000 Retained earnings Total contributed capital and retained earnings \ 350,000 Less: Treasury stock (400 shares at cost) Total stockholders' equity

What is treasury stock? How is it reported on the financial statements?

Portland Sound Cafe began business on January 1,2017.The corporate charter authorized issuance of 1,000 shares of no-par value common stock,of which 200 shares were issued on January 1,and 4,000 shares of $8 par value,6% cumulative preferred stock,of which none were issued on January 1.Portland Sound sold 400 shares of common stock at $8 per share on May 1.The entry to record the issuance of the shares on May 1 will

Arco Corporation declared a cash dividend on June 2 of $6 per common share.The company has 2,000 shares of common stock authorized,1,000 shares issued,and 200 in the treasury.The entry to record the declaration of the cash dividend increases a(n)

With regard to a corporation's stock,par value is

Treasury stock is reported as a reduction in stockholders' equity.

When the owner of a sole proprietorship withdraws assets from the business for personal use,

Cloud Co.had the following account balances at December 31,2017: Retained earnings \ 52,000 Treasury stock, 500 common shares at cost (10,000) Common stock, \ 1 par value, 10,000 shares authorized, 4,000 shares issued and outstanding 4,000 Cash dividends payable\_common 6,000 Additional paid-in capital—common 1,200 Additional paid-in capital—treasury stock 900 Common stock dividend distributable 6,200 Prepare the Stockholders' Equity section of the balance sheet for Cloud Co.at December 31,2017.

Preferred stock receives first preference on voting rights.

If Idaho Company has paid out more in dividends than it has had in net income,over the lifetime of the company,then there should be a

Lawrenceville Co.reported the following: ​ Common stock,$3 par,10,000 shares authorized,5,000 shares issued and outstanding ​ What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the dividend is declared?

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 number of shares issued less the number of shares held as treasury stock is the number of __________.

Cloud Co.provided the following information from its 2017 financial statements: Total assets \ 655,000 Total liabilities 225,000 In addition,the Stockholders' Equity section of the balance sheet showed: Preferred stock, 10 \%, \ 2 par value, 10,000 authorized, 8,000 issued and outstanding, \ 5 liquidation value \ 16,000 Common stock, \ 4 par value, 20,000 shares authorized, 10,000 issued and outstanding 40,000 The common stock had a year-end market price of $24. A) Calculate the book value per common share at year-end. B) Indicate the usefulness of this ratio for Cloud $\mathrm { Co }$ .

Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?