Exam 12: Income and Changes in Retained Earnings

The common stock of Securetech Corporation consistently sells at a market price of 20 times earnings .What would be the most likely effect of a 10-cent increase in Securetech's basic EPS?

Unusual and infrequent non-recurring items are found on the income statement:

Stock dividends What is the effect of a stock dividend?

Earnings per share-basic and diluted Stainless Corporation had net income of $7,800,000 in 2018.The company had 500,000 shares of $4 par value common stock and 70,000 shares of 8%,$100 par,preferred stock outstanding throughout the year.Each share of preferred stock is both cumulative and convertible.Each share of preferred stock is convertible into two shares of common stock.Compute the following for 2018:

Supervox Corporation declared a 3-for-2 common stock split,but this transaction was erroneously recorded as a 50% common stock dividend.As a result:

To qualify as an unusual and infrequent item,a gain or loss must:

To receive the next cash dividend,an investor must purchase the stock before the:

Stockholders' equity The stockholders' equity section of the balance sheet of Creative Corporation at December 31,2018,appears as follows: Answer the following questions based on the stockholders' equity section given above.The company had no treasury stock transactions before 2018. (a)What is the average price per share of preferred stock? (b)How many shares of common stock are outstanding? (c)A small stock dividend of 5,000 shares was declared and distributed during 2018.What was the market price per share on the date of declaration? (d)If Creative Corporation had reacquired 7,000 shares of treasury stock early in 2018,compute the price per share for which the reissued treasury stock was sold. (e)Assume all remaining treasury stock is reissued at a price of $12 per share in January of 2018. Give the journal entry to record this transaction.

Which of the following statistics is generally computed for both common and preferred stock?

A small stock dividend of 1,000 shares was declared and distributed during 2018.What was the market price per share on the date of declaration?

Which of the following would not be used in computing diluted earnings per share?

Assume that all remaining treasury stock is reissued at a price of $14 per share in January of 2019.What amount should be credited to the account Additional Paid-In Capital: Treasury Stock Transactions in the journal entry to record this transaction?

On January 31,2018,Village Bank had 500,000 shares of $2 par value common stock outstanding.On that date,the company declared a 14% stock dividend when the market price of the stock was $37 per share.The immediate effect of this dividend upon Village Bank was:

Which of the following would have no effect on Retained Earnings?

Designs,Inc.had 4,000 shares of $7,$100 par preferred stock and 50,000 shares of common stock outstanding throughout 2018.During 2018,Designs declared a dividend of $7 per share on its common stock.Compute earnings per share for 2018 if Designs' income statement showed net income of $630,000.

Diluted earnings per share represents a hypothetical case,showing what earnings per share would be if certain securities were converted into additional shares of common stock.

A stock split changes the par value of a stock,whereas a stock dividend does not.

General Corporation was organized on January 1 and issued 500,000 shares of common stock on that date.On July 1,an additional 200,000 shares were issued for cash.Net income for the year was $5,184,000.Net earnings per share amounted to:

Stock dividend and treasury stock At the beginning of the current year,King Cole,Inc.had 300,000 shares of capital stock outstanding and total stockholders' equity of $1,200,000.During the year,the company earned net income of $325,000,declared cash dividends of $150,000,distributed a 5% stock dividend of 15,000 shares when the market price of the stock was $16 per share,and purchased 3,000 shares of treasury stock at a cost of $13 per share.Compute the following at the end of the current year: (a)Total stockholders' equity: (b)Number of shares of stock outstanding: (c)Book value per share:

Diluted earnings per share is a hypothetical computation to warn stockholders what could happen if: