Exam 11: Stockholders Equity

A ________________ allows the firm to eliminate a class of stock by paying the stockholders a specified amount.

When treasury stock is resold for an amount less than its cost,the difference between the sales price and the cost is deducted from the Additional Paid-In Capital-Treasury Stock account or the Retained Earnings account (if the Additional Paid-In Capital-Treasury Stock account does not exist).

When stock is issued for cash,only the par value of the stock should be reported in the stock account.

In the space provided,indicate the effect of the dividend transactions on each account listed by writing the amount and whether the account would be increased or decreased.The company has 10,000 shares of $1 par value,common stock authorized,and 8,000 shares issued.In instances where there is no effect on that account,place an X in the box.

When treasury stock is reissued and the cost is less than the reissue price,the difference increases additional paid-in capital.

Overton Supply reported the following information at December 31,2012: Answer the following questions for Overton Supply.

Penny's Cafe began operations on March 1,2012.The corporate charter authorized the issuance of 3,000 shares of $2 par value common stock and 1,000 shares of $3 par value,8% cumulative preferred stock.The company's fiscal year ends on February 28.Penny's sold 500 shares of common stock at $6 per share on April 1.What impact does the entry to record the April 1 transaction have on total stockholders' equity?

How is treasury stock shown on the balance sheet?

The participating feature of stock allows stockholders to sell stock back to the company.

When a company declares a 3-for-1 stock split,the number of outstanding shares

What is the difference between par value and market value? Which is the better indicator of the true worth of the stock?

Why is stockholders' equity viewed as a residual amount?

An accounting transaction is not recorded when a corporation declares and executes a stock split.

Explain the two ways that a dividend rate on preferred stock may be stated by giving examples.

[APPENDIX] A sole proprietorship is a separate entity for legal purposes.

Stock dividends affect the par value per share of the stock.

Tropical Co.declared a cash dividend of $30,000.The entry includes a(n)

Lear Flower Shop presented the stockholders' equity section of its balance sheet on January 1,2012,as follows: All common shares were originally sold for $6 each.The following transactions occurred during 2012: -- Reacquired 3,000 shares of common stock at $15 per share on February 16. -- Sold 2,000 shares of treasury stock at $20 per share on June 1.

Which of the following combinations appropriately reflects the type of accounts represented by the Treasury Stock account and Additional Paid-in Capital--Treasury Stock account? Treasury Stock Additional Paid-Capital - Treasury Stock

The following stockholders' equity section of Petal Pusher Company's balance sheet appeared at December 31,2012.