Exam 14: The Corporate Income Statement and the Statement of Stockholders Equity

a. Elton Corporation has 6,000 shares of $100 par value, 8 percent cumulative preferred stock and 10,000 shares of $50 par value common stock outstanding. All shares were issued at par value. In addition, retained earnings total $198,000. If the preferred stock is callable at $105 per share and one year's dividends are in arrears, compute book value per share of preferred stock. b. Assume the same facts as in a above. Calculate book value per share of common stock. c. Assume the same facts as in a above and that Elton Corporation declares a 15 percent stock dividend on its common stock. If the market value on the declaration date was $60 per share, for what amount will Additional Paid-in Capital, Common be credited? d. Assume the same facts as in a above and that Elton Corporation declares a 4-for-1 stock split on its preferred stock. After the split, total par value of preferred stock equals what amount?

On the income statement, all income taxes should be centralized in the Income Taxes Expense account.

Investments by owners are contained in comprehensive income.

Distinguish between cash and retained earnings.

A liability arises when the board of directors declares a stock dividend.

Net income does not include

a. Shoup Corporation has 9,000 shares of $10 par value common stock and 5,000 shares of $50 par value, 10 percent cumulative preferred stock outstanding. All shares were issued at par value. In addition, retained earnings total $90,000. If the preferred stock is callable at $54 per share, and one year's dividends are in arrears, compute book value per share of preferred stock. b. Assume the same facts as in a above. Calculate book value per share of common stock. c. Assume the same facts as in a above and that Shoup Corporation declares a 5-for-1 stock split on its common stock. After the split, total par value of common stock equals what amount? d. Assume the same facts as in a above and that Shoup Corporation declares a 12 percent stock dividend on its preferred stock. If the market value on the declaration date was $70 per share, for what amount will Preferred Stock Distributable be credited?

Prepare a corporate income statement in good form from the following year-end balances as of December 31, 2010, from the general ledger of Hammond Corporation. Assume 10,000 shares of common stock are outstanding for the year.

Which of the following would be involved in the computation of earnings per share for a company with a simple capital structure?

A convertible preferred stock will be included in the denominator of diluted earnings per common share.

Net income is a component of comprehensive income.

What is the basis of the statement "Accounting income is a useless measurement because it is based on so many arbitrary decisions"? Is the statement true? Explain your answer.

Which of the following income statement figures probably would be the best predictor of a corporation's future performance?

One objective of the corporate income statement is to separate the results of continuing operations from those of discontinued operations.

A 2-for-1 stock split will have the same effect on the number of shares outstanding as a 200 percent stock dividend.

A convertible security is used in the computation of

The quality of a company's earnings is affected by the accounting estimates chosen by the company's management.

A corporation's actual income taxes payable is computed in accordance with generally accepted accounting principles.

Nagle Corporation computed its actual income taxes payable for 2010 to be $46,000. Because of differences in accounting procedures and income tax rules, the income taxes expense to be reported for 2010 is $53,500. Prepare the entry in journal form without explanation to record the income taxes expense and income taxes payable for 2010.

Extraordinary gains and losses are a component of income from operations.