Exam 12: Contributed Capital

Use the following information to obtain the ratios requested below. Where necessary, carry answers to one decimal place. Dividends per share: $.54 Market price per share: $30 Net income: $88,000 Average stockholders' equity: $625,000 Earnings per share: $1.25 a. Dividends yield = _____________% b. Return on equity = _____________% c. Price/earnings (P/E) ratio = __________times

All of the following are stockholders' equity accounts except

Issuing common and preferred stock generally has been popular among corporations. However, some companies have bought back their common stock. For example, because its stock had declined under the uncertainty of possible health care reforms, Bristol-Myers Squibb bought 25 million of its own shares. Other companies have been awash in cash because of the decline in interest rates, layoffs to cut costs, and decreased need to make new investments. Quaker Oats purchased 4.8 million of its own shares for $323 million and plans to purchase 5 million more. The Quaker Oats treasurer was quoted as saying, "We spend on new products, we make acquisitions, we raise the dividend, and we still can't soak up the cash." Sun Microsystems cut its outstanding shares by 9 percent with an aggressive buyback program, and PepsiCo purchased 50 million shares at a cost of $1.8 billion. For what reasons would a company buy back its own shares?

Beckham Corporation has 3,000 shares of $100 par value, 7 percent cumulative preferred stock, and 10,000 shares of $10 par value common stock outstanding during its first five years of operation. Beckham Corporation paid cash dividends as follows: 2006, $14,000; 2007, $14,500; 2008, $65,000; 2009, $30,000; 2010, $15,000. The amount of dividends received by the preferred stockholders during 2010 was

In the rare instance when a par value stock is issued at a cash price below par, the excess of the par value over the amount of cash received should be

The net effects on a corporation of the declaration and payment of a cash dividend are to

The sale of treasury stock at an amount greater than cost results in a gain to be reported on the income statement.

How is it possible for a corporation to have more shares issued than it has outstanding?

The entry required to record start-up and organization costs will cause a decrease in net income for the period.

Callable preferred stock is preferred stock that may be redeemed or retired at the option of the stockholder.

When shares of preferred stock may be redeemed by the corporation at a certain price, the shares are said to be

The board of directors of Berweck Corporation declared a cash dividend on January 18, 2010 , to be paid on February 18, 2010 , to shareholders holding the stock on February 2, 2010 . Given these facts, the date February 2, 2010 , is referred to as the

Preferred stock is considered the residual equity of a corporation.

Retained earnings are a component of contributed capital.

Corporations are subject to less government control and regulation than are other forms of business.

The purchase of treasury stock will result in

The information that follows pertains to stockholders' equity data of the Keswick Corporation on December 31, 2010. Compute the amount of each item indicated by a letter in the listing below. Where necessary, carry answers to two decimal place.

A dividend that represents a return to the stockholders of a part of their paid-in capital rather than a distribution out of retained earnings is called a liquidating dividend.

A corporation has 5,000 shares of 8 percent noncumulative preferred stock and 10,000 shares of common stock outstanding. Par value for each is $100. No dividends were paid last year, but this year a $55,000 dividend is paid. How much of this $55,000 goes to the holders of common stock?

On the balance sheet, treasury stock owned by the company is classified properly as