Exam 12: Stockholders Equity

Although a corporation may have sufficient cash and retained earnings to pay a dividend,its board of directors may not declare dividends.Name at least two reasons why a board of directors might not declare dividends.

The par value of treasury stock is deducted from total Contributed Capital and Retained Earnings in determining total stockholders' equity.

The following facts pertain to Quail Corporation: On the basis of these facts,compute the amount of net income (loss)for Quail Corporation for 20x5.

An advantage of the corporate form of business is

a.Marco 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 Marco 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 Marco Corporation declares a 4-for-1 stock split on its preferred stock.After the split,total par value of preferred stock equals what amount?

Preferred stock is considered the residual equity of a corporation.

No entry is required on the date of payment for a cash dividend.

When stock is issued for noncash assets or services,the dollar amount to be recorded for this exchange is determined by the

A liquidating dividend is usually paid when a company is going out of business or reducing its operations.

Compensation expense related to employee stock options is a tax-deductible expense for the corporation.

Use the following information to answer the question below. The following accounts appear in the ledger of Pepper Corporation on December 31,20x5 A balance sheet prepared on December 31,20x5 ,would report total contributed capital of

The board of directors of Lark Corporation declared a cash dividend of $3.50 per share on 57,000 shares of common stock on June 14,20x5.The dividend is to be paid on July 15,20x5,to shareholders of record on July 1,20x5.The proper entry to be recorded on June 14,20x5 is,

A stock split normally increases total stockholders' equity.

The board of directors carries out the day-to-day operations of the business.

The declaration of cash dividends will increase the book value per share of common stock.

Define outstanding stock.

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

The number of outstanding shares should exceed the number of authorized shares.

A stock dividend increases the total amount of stockholders' equity.

Start-up and organization costs include all of the following except