Question 1

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. Items are used only once.
-Which item results in no change to stockholders' equity?

Accepted Answer

A) Preferred stock issued by Carlton 
B) Amount received by Carlton in excess of par value when preferred stock was issued 
C) Dividends in arrears on Carlton preferred stock 
D) Cash dividend declared but unpaid on Carlton stock 
E) Stock dividend declared but unissued by Carlton
F)Treasury stock
G)Amount received in excess of cost when treasury stock is reissued by MJ
H)Retained earnings

Question 2

Fashion Company reported the following: Common stock, $3 par, 10,000 shares authorized, 5,000 shares issued and outstanding
What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the dividend is declared?

Accepted Answer

A)  Retained earnings in the amount of $15,000 is transferred to the contributed capital accounts. 
B)  Cash decreases $30,000. 
C)  Additional Paid-in Capital decreases $30,000. 
D)  A stock dividend has no effect on any stockholders' equity accounts.

Question 3

As a result of a stock split,

Accepted Answer

A)  an entry must be made showing the effect on stockholders' equity 
B)  the market price of the outstanding stock will increase because a split is evidence of a profitable company. 
C)  the par value of the stock is changed in the reverse proportion as the stock split. 
D)  the stockholders have a higher proportionate ownership of the company.

Question 4

Several transactions occurred for Shadow Dreams Corporation during 2015. Indicate the effect each item has directly on retained earnings by writing the amount in the space provided. Place a + plus sign in front of the amount if the item increases retained earnings, or parentheses around the amount if the item decreases retained earnings. Place an X in the blank for items that have no direct effect on retained earnings. Items that affect the income statement do not directly affect retained earnings.

Accepted Answer

The answer of Several transactions occurred for Shadow Dreams Corporation...

Question 5

Assume the following independent situations:
1. Company A has total stockholders' equity at year­end of $600,000 and has 10,000 shares of stock.
2. Company B has total stockholders' equity at year­end of $600,000 and has 10,000 shares of stock. The company
also has 60,000 shares of preferred stock, which has a $1 par value and a liquidation value of $3 per share.
Required:
Calculate the book value per share for Company A and Company B.

Accepted Answer

The answer of Assume the following independent situations:
1. Company A...

Question 6

Select the statement on which each of the items provided below would be reported.
-Foreign currency translation adjustments.

Accepted Answer

A) Statement of retained earnings 
B) Statement of stockholders' equity 
C) Items that may require reporting on either statement 
D) Items not reported on either of the statements

Question 7

What is treasury stock? How is it reported on the financial statements?

Accepted Answer

The answer of What is treasury stock? How is it...

Question 8

The Stockholders' Equity section of the balance sheet for High Five Design Company appeared as follows before its recent stock dividend:

Accepted Answer

The answer of The Stockholders' Equity section of the balance...

Question 9

If a company issues $5 par value common stock,

Accepted Answer

A)  $5 per share is presented in the common stock account on the balance sheet. 
B)  the minimum selling price is $5. 
C)  the shareholders will receive $5 in dividends. 
D)  liabilities are increased as a result of the transaction.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Vegas Finance Company reported the following: Common stock, $10 par, 100,000 shares authorized, 80,000 shares issued and outstanding What is the effect of issuing 1,000 shares of common stock at $15 per share?

Accepted Answer

A)  Cash increases $10,000. 
B)  Common Stock increases $15,000. 
C)  Additional Paid-in Capital increases $5,000. 
D)  Retained Earnings increases $5,000.

Question 12

Select the letter of the term each statement best describes.
-Net income that has been earned by the corporation but not paid out as dividends.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Question 13

Valor Company issued 5,000 shares of $1 par common stock for $30 per share, providing the company with $150,000 in cash. What effect, in addition to the increase in cash, does this transaction have on the accounting equation for Valor?

Accepted Answer

A)  Common Stock increases $150,000. 
B)  Common Stock increases $5,000; Additional Paid-in Capital - Common increases $145,000. 
C)  Common Stock increases $5,000; Retained Earnings increases $145,000. 
D)  Common Stock increases $5,000; Gain on Sale of Common Stock increases $145,000.

Question 14

A company issued 4,000 shares of $5 par common stock for $30 per share. The company purchased 1,200 shares as treasury stock at $32 per share. Later, the company reissued 400 shares of the treasury stock at $34 per share. Which of the following is true?

Accepted Answer

A)  The Treasury Stock account should have a balance of $24,800. 
B)  The company has a gain of $800 that should appear on the income statement. 
C)  The Treasury Stock account should have a balance of $25,600. 
D)  The company has a gain of $1,600 that should appear on the income statement.

Question 15

Treasury stock is stock that has been issued, but not currently outstanding.

Accepted Answer

A) True 
 B)False

Question 16

Which accounts are used by a sole proprietorship that are not used by a corporation?

Accepted Answer

The answer of Which accounts are used by a sole...

Question 17

Select the letter of the term each statement best describes.
-Stock that has a provision allowing the stockholders to share in the distribution of an abnormally large dividend on a percentage basis.

Accepted Answer

A) authorized shares 
B) issued shares 
C) outstanding shares 
D) par value 
E) additional paid-in capital
F)retained earnings
G)cumulative feature
H)participating feature
I)callable stock
J)treasury stock
K)retirement of stock
L)dividend payout ratio
M)stock dividend
N)stock split
O)market value per share
P)convertible stock
Q)book value per share

Question 18

The statement of stockholders' equity

Accepted Answer

A)  is one of the required financial statements for the annual report, when changes have occurred in the stockholders' equity accounts. 
B)  shows the changes in retained earnings for the period, which includes the increase or decrease as a result of net income or loss for the period, and dividends for the period. 
C)  includes accounts, such as the retained earnings and common stock accounts, but not changes to the retained earnings account, since those items are reported on the statement of retained earnings. 
D)  is used only if a corporation frequently issues common stock.

Question 19

From the following list, identify each item as operating O, investing I, financing F, or not separately reported on the statement of cash flows N.
-Payment of cash dividend on preferred stock

Accepted Answer

A) Operating - O 
B) Investing - I 
C) Financing - F 
D) Not separately reported - N

Question 20

Select the best answer from the list below to complete statements 1-11 that follow.
 
-The annual dividend amount divided by the annual net income is .

Accepted Answer

The answer of Select the best answer from the list...

Exam 11: Stockholders Equity

Carlton Industries has identified the following items and would like you to answer a few questions about their effect on Stockholders' Equity. Items are used only once. -Which item results in no change to stockholders' equity?

Fashion Company reported the following: Common stock, $3 par, 10,000 shares authorized, 5,000 shares issued and outstanding What is the effect of a 10% stock dividend if the market price of the common stock is $30 per share when the dividend is declared?

As a result of a stock split,

Select the statement on which each of the items provided below would be reported. -Foreign currency translation adjustments.