Exam 13: Accounting for Corporations

The excess of the issuance price over the stated value of a no-par common stock should be credited to the

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?

If only common stock is outstanding,total stockholders' equity divided by the number of shares of common stock outstanding is called the

The declaration of a cash dividend causes an increase in a corporation's liabilities at the date of declaration.

Firehawk Corporation had net income of $560,000 in 20x5 and paid dividends of $440,000 on 200,000 shares of outstanding common stock.Total stockholders' equity at the end of 20x5 was $2,060,000 and the market price for each share of Firehawk's stock was $58 throughout 20x5.Based on this information,what is the price/earnings ratio for Firehawk's stock?

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,

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

The Additional Paid-in Capital account normally arises in the accounting records when

Dividends in arrears are disclosed as liabilities of a corporation.

The price/earnings (P/E)ratio is a measure of investors' confidence in a company's future.

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

According to generally accepted accounting principles,treasury stock usually should be recorded at

Treasury stock is reported as an asset on the balance sheet because treasury shares may be sold later.

Which of the following transactions affects total retained earnings?

Stockholders who own preferred stock usually do not have voting rights,whereas stockholders who own common stock usually have voting rights.

A company purchases 300 shares of its $100 par value common stock at $110 per share.It then reissues 50 shares at $114 per share.The entry upon reissue of the stock is:

The word preferred in the phrase preferred stock means that an owner of preferred stock has some advantages over a bondholder.

Use the following information to answer the question below. The following transactions involving Cactus Wren Corporation occurred during the year: Apr. 1 $\quad$ Purchased 2,000 shares of its own preferred stock for $20, the current market price. This is the first transaction involving its own stock engaged in by the company. May 3 $\quad$ Sold 400 of the shares purchased on April 1 for $25 per share. June 5 $\quad$ Retired 600 of the shares purchased on April 1. The original issue price was $10. The par value of the stock is $5. -The entry to record the May 3 transaction is:

A stock split results in a transfer of the market value of the stock from Retained Earnings to Contributed Capital.

Treasury stock is considered a reduction in stockholders' equity,not a purchase of assets .