Exam 13: Accounting for Corporations

How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

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

Legal capital of a corporation is the maximum amount that can be reported as contributed capital.

A stock split normally increases total stockholders' equity.

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

Preferred stock is considered the residual equity of a corporation.

Return on equity equals net income divided by average stockholders' equity.

On January 1,20x5,Dove Valley Corporation had 100,000 shares of $10 par value common stock issued and outstanding.All 100,000 shares had been issued in a prior period at $30 per share.On February 1,20x5,Dove Valley purchased 4,000 shares of treasury stock for $36 per share and later sold the treasury shares for $40 per share on March 2,20x5.The entry to record the purchase of the treasury shares on February 1,20x5,is:

The following facts pertain to the stockholders' equity section of the balance sheet of Charlotte Corporation: During 20x5,Charlotte declared and distributed a stock dividend.Also during 20x5,Charlotte declared and paid cash dividends of $26,000.There were no changes in the number of shares of stock issued and outstanding during the period except for the change caused by the stock dividend.Calculate the amount of net income reported by Charlotte for 20x5.

To evaluate the amount of dividends they receive,investors use the ratio called

Use the following information to answer the question below. On January 1,20x5,Falcon Corporation had 40,000 shares of $10 par value common stock issued and outstanding.All 40,000 shares had been issued in a prior period at $17 per share.On February 1,20x5,Falcon purchased 3,100 shares of treasury stock for $19 per share and later sold the treasury shares for $26 per share on March 2,20x5. -What amount of gain due to these treasury stock transactions should be reported on the income statement for the year ended December 31,20x5 ?

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 stockholders' equity of

Which of the following could be described as both an advantage and a disadvantage of incorporation?

a.Indicate on the blanks below the effect (I = increase,D = decrease,NE = no effect)of the entry to record the declaration of a common stock dividend on each of the items listed. b.Indicate on the blanks below the effect (I = increase,D = decrease,NE = no effect)of the entry to record the distribution of a (previously declared and recorded)common stock dividend on each of the items listed. a. b. 1. Assets 2. Balance of Common Stock account 3. Total contributed capital 4. Total retained earnings 5. Total stockholders' equity 6. Par value per share 7. Total number of shares outstanding

How should dividends in arrears be shown on a corporation's balance sheet?

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 effects of the entry to record the payment of the dividend on July 15,20x5,are to

The purchase of treasury stock will result in

On which of the following dates involving stock dividends does a liability arise?

A corporation often uses an underwriter to guarantee the sale of stock in an initial public offering (IPO).

On July 1,20x5,Blaylock Corporation had 40,000 shares of its $100 par value common stock outstanding.On July 2,20x5,Blaylock declared a 15 percent stock dividend to be distributed on August 6,20x5,to shareholders of record on July 16,20x5.What amount of retained earnings should be transferred to contributed capital because of this dividend?