Exam 15: Shareholders Equity: Capital Contributions and Distributions

Based on the following summary of shareholders' equity accounts, answer the following questions.No dividends were paid during the Year 1 and Year 2. December 31 , Year 1 December 31, Year 2 Common stock, \ 5 par value \ 1,000,000 \ 1,250,000 Additional paid-in capital 1,500,000 2,000,000 Net unrealized loss on investment in marketable equity securities (100,000) (150,000) Retained earnings 2,000,000 2,500,000 Less: Cost of treasury shares (200.000) (224,000) Total shareholders' equity \ 4.200.000 \ 5.376.000 a. What is net income during Year 2? b. How many additional common shares were issued in Year 2? c. What was the cost per share of the treasury stock acquired during Year 2? 2,000 additional shares were acquired during the year. d. What price was paid for the additional common shares issued in Year 2? e. What happened to the portfolio of long-term marketable equity securities?

Lakeside Company has not declared nor paid dividends on its cumulative preferred stock in the last three years.These dividends should be reported

Treasury stock or treasury shares are shares a firm has previously issued and later reacquired. Which of the following is/are true?

Firms occasionally issue stock options in order to

U.S.GAAP and IFRS do not classify preferred stock subject to redemption only at the option of the issuing firm as shareholders' equity.

Discuss why firms repurchase their own stock?

Treasury shares arise when a corporation reacquires its own previously issued common shares.A reason for reacquiring outstanding common stock is to use the treasury shares in various option arrangements.When holders of stock options, stock rights, stock warrants, and convertible securities exercise their options, firms usually receive

The term capital can mean

Why do corporate directors usually declare dividends less than the legal maximum and thereby allow retained earnings to increase as a matter of corporate financial policy?

Which of the following is/are not true?

Prepare journal entries for the following transactions: a.Issue 15,000 shares, selling price is $45 and par value is $1. b.Buy back 650 shares of outstanding stock at $48 per share. c.Sell 500 shares of treasury stock at $50 per share.

The annual reports to shareholders must explain the changes in all shareholders' equity accounts.

What are convertible bonds and convertible preferred stock and how does U.S.GAAP and IFRS account for their issuance? Describe the accounting for conversion of convertible bonds and convertible preferred.

Describe the accounting for employee stock options (ESOs).

Which of the following is not true regarding a reverse stock split?

Which of the following is not true?

A stock split accomplished by altering the par value in direct proportion to the number of new shares

Which of the following is/are not true concerning an employee stock options' time value element?

Discuss the reasons that investors buy preferred stock and the dividend rights of preferred stockholders.

Stock dividends have little economic substance for shareholders.