Exam 11: Corporations: Organization, Stock Transactions, and Dividends

A large retained earnings account means that there is cash available to pay dividends.

Carmen Company a publicly traded company with preferred and common stock issued. As of January 1st, it had 50,000 shares of $100 par, 2% preferred stock outstanding and 250,000 shares of $10 par common stock outstanding. (a) On January 31st, the Board of Directors issues a requirement to purchase 5,000 shares of common stock at market price. The shares are purchased at a market price of $22 per share. Journalize the purchase utilizing the cost concept. (b) On March 15th, Carmen declares a dividend on preferred stock of $2.75 per share. The date of record is March 25th and the date of payment is March 31st. Journalize these events. (c) On December 1st, Carmen declares a cash dividend on common stock of $0.12 per share. The date of record is December 15th and the date of payment is December 21st. Journalize these events. (d) On December 27th the board orders that 2,500 shares of treasury stock be sold. The sale price is $25 per share. Journalize this event.

Cash dividends are normally paid on shares of treasury stock.

Which of the following would appear as a prior-period adjustment?

While some businesses have been granted charters under state laws, most businesses receive their charters under federal laws.

A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

A company has 10,000 shares of $10 par common stock outstanding. Prepare entries to record the following:

For accounting purposes, stated value is treated the same way as par value.

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be

When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a

On February 1, Marine Company reacquired 7,500 shares of its common stock at $30 per share. On March 15, Marine sold 4,500 of the reacquired shares at $34 per share. On June 2, Marine sold the remaining shares at $28 per share. Required: Journalize the transaction of February 1, March 15, and June 2.

Twenty percent of all businesses in the United States are corporations and they account for 80% of the total business dollars generated.

Treasury Stock is listed in the stockholders' equity section on the balance sheet.

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the number of shares outstanding?

If a company has preferred stock, the preferred stock dividend is added to net income when computing earnings per common share.

Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.

If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 43,000.

Earnings per share

A corporation purchased 1,000 shares of its $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of revenue realized from the sale?

One of the prerequisites to paying a cash dividend is sufficient retained earnings.