Exam 11: Stockholders Equity: Paid-In Capital

Zigma Corporation is authorized to issue 2,000,000 shares of $4 par value capital stock. The corporation issued half the stock for cash at $8 per share, earned $336,000 during the first three months of operation, and declared a cash dividend of $60,000. The total paid-in capital of Zigma Corporation after three months of operation is:

A deficit appears in a corporation's financial statements:

Refer to the information above. If Amelia decided to purchase 20,000 shares of its common stock to be used for future stock option plans at $11.40 per share, what journal entry would they make?

The total amount of Grant's paid-in capital at December 31, 2009, is:

Refer to the information above. The journal entry to record the reissuance of the 600 shares of stock on October 15 includes a:

Factors affecting the market price of stocks (a) Murdock Corporation has outstanding several different stock issues. For each of the types of stock listed below, briefly describe a situation or circumstance that would cause the market price of that type of stock to increase. Preferred stock Common stock Convertible preferred stock (b) How would the increase in market value of any of Murdock's stock be reflected in Murdock's financial statements?

Refer to the information above. Assuming there are no further transactions involving treasury stock in 2011, the financial statements of Jetter Corporation for 2011 will show:

Mayfair Corporation has outstanding 70,000 shares of $1 par value common stock as well as 20,000 shares of 7%, $100 par value cumulative preferred stock. At the beginning of the year, the balance in retained earnings was $800,000, and one year's dividends were in arrears. Net income for the current year is $580,000. Compute the balance in retained earnings at the end of the year if Mayfair Corporation pays a dividend of $3 per share on its common stock this year.

In the event of the liquidation of a corporation, treasury stock ordinarily has preference as to liabilities, while preferred stock has preference as to assets.

Western Moving Corporation was organized with authorization to issue 100,000 shares of $1 par value common stock. Forty thousand shares were issued to Tom Morgan, the company's founder, at a price of $5 per share. No other shares have yet been issued. Which of the following statements is true?

Which statement is true about a stock split?

The total amount of paid-in capital: $__________

A corporation is a legal entity separate from its owners; it may sue and be sued, but it may not own property in its own name.

The sale of treasury stock at a price in excess of its cost results in a realized gain which should be presented as a non-operating item in the income statement.

Book value per share of common stock is derived by which of the following:

Interpreting the stockholders' equity section The stockholders' equity section of the balance sheet of Benson Corporation (with certain details omitted) appears below: Answer the following questions based on the stockholders' equity section given above. (a) What is the total amount of legal capital? (b) What is the total amount of dividends paid annually to the preferred stockholders? (c) What is the average issue price of a share of common stock? (d) The balance in retained earnings at the beginning of the current year was $575,000, and there were no dividends in arrears. Net income for the current year was $360,000. What is the amount of the dividends declared on each share of common stock during the current year?

Cumulative preferred stock means the stock is entitled to its regular dividend plus an additional share of the total amount of declared dividends.

If a corporation has only common stock outstanding, which of the following constitutes legal capital at a particular date?

The par value of the common stock of a large listed corporation:

Financial reporting of net earnings and retained earnings The 2012 annual report of Kirtland Products disclosed net earnings of approximately $87 million for the fiscal year ending March 31, 2012, and retained earnings of approximately $485 million as of March 31, 2012. (a) Which financial statement shows computation of the net earnings? (b) Which financial statement includes the retained earnings figure of $485 million? (c) Explain why Kirtland reports $87 million as net earnings, but a much larger amount, $485 million, as retained earnings.