Exam 11: Reporting and Analyzing Equity

On July 1, a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000. Prepare the general journal entry to record this transaction.

Explain the difference between a large stock dividend and a small stock dividend. In addition, explain how to record these two types of stock dividends.

Stock that is retired is the same as authorized and unissued stock.

The price-earnings ratio is computed by dividing earnings per share by the market price per share.

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. What is the journal entry necessary to record the repurchase of stock on June 30 using the cost method?

A debit balance in retained earnings is referred to as an accumulated deficit.

A liquidating dividend is:

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called ____________________________.

Lafferty Corporation reported earnings per share of $9.75, paid a $6.00 cash dividend per share to preferred shareholders, and paid a $0.54 cash dividend per share to common shareholders. There were 10,000 shares of preferred stock outstanding and 600,000 shares of common stock outstanding during the year, and the market price per share of common stock was $41.60. Calculate the company's dividend yield for common stock.

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

A company's stock is selling for $35.70 per share at year-end. This year it paid shareholders a $1.43 per share cash dividend, reported earnings per share of $11.00, and had 750,000 common shares outstanding at year-end. Calculate the company's dividend yield.

The group responsible for and have final authority for managing a corporation's activities is(are) the ________________________________.

Stocks with a price-earnings ratio less than 20 to 25 are likely to be overpriced.

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:

Ultimate Sportswear has $100,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

Earnings per share is the amount of income earned per share of a company's outstanding (weighted-average) common stock.

Dividend yield shows the annual amount of cash dividends distributed to common shares relative to the stock's market price.

On June 30, a company declared a cash dividend of $0.35 per common share to the shareholders of record on July 15. The cash dividend will be paid on July 31. This company has 500,000 shares authorized and 100,000 shares outstanding. Prepare the journal entries required on June 30, July 15 and July 31.

A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

A liability for dividends exists: