Exam 13: Accounting for Corporations

A company reported net income of $850,000 for the current year. The year-end market price per common share was $12 and there were 425,000 weighted-average shares of common stock outstanding. Calculate the company's price-earnings ratio.

A corporation had stockholders' equity on January 1 as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,000,000; Retained Earnings, $3,000,000. Prepare journal entries to record the following transactions:

A company has $424,000 in total stockholders' equity. The company has no preferred stock and has 40,000 common shares outstanding. Its book value per share is $10.60. $424,000/40,000 shares = $10.60/share

Cumulative preferred stock has a right to be paid both current and prior periods' unpaid dividends before any dividend is paid to common shareholders.

Organization expenses of a corporation often include legal fees and promoter fees.

A corporation is responsible for its own acts and debts. This is because a corporation is considered a __________________________________.

Preferred stock with a feature allowing preferred stockholders to share with common shareholders in any dividends in excess of the percent or dollar amount stated on the preferred stock is called:

The costs of bringing a corporation into existence, including legal fees, promoter fees, and amounts paid to obtain a charter are called:

Identify and discuss the key differences between common and preferred stock.

Buying stock in a corporation is attractive to investors because:

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

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

Stocks that pay relatively large cash dividends on a regular basis are called:

A company reported stockholders' equity on January 1 of the current year as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,025,000; Retained Earnings, $2,850,000. Prepare journal entries to record the following transactions:

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

Stock that is not assigned a value per share by the corporate charter is called ________________.

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

A stock split is the distribution of additional shares of stock to stockholders according to their percent of ownership.

A company paid a cash dividend of $0.44 per share during the current year, and reported 18,000 shares of common stock issued, and 2,000 common shares in treasury stock during the current year. The year-end market price per share was $27.50. Calculate the following: (1) total amount of cash dividends paid to common shareholders, and (2) dividend yield.

On May 1, a company's board of directors declared a 10% stock dividend to be distributed on June 1 to the stockholders of record on May 21. The company had 250,000 shares of $10 par value common stock outstanding with a market value of $22 per share. Prepare the journal entries required on May 1, May 21, and June 1.