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Exam 11: Corporate Reporting and Analysis

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Question 31

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On September 1,Ziegler Corporation had 50,000 shares of $5 par value common stock,and $1,500,000 of retained earnings.On that date,when the market price of the stock is $15 per share,the corporation issues a 2-for-1 stock split.The general journal entry to record this transaction is:

A) Debit Retained Earnings $750,000; credit Common Stock Split Distributable $750,000.
B) Debit Retained Earnings $750,000; credit Common Stock $750,000.
C) Debit Retained Earnings $250,000; credit Common Stock $250,000.
D) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.
E) No entry is made for this transaction.

F) B) and C)
G) A) and E)

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Question 32

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Shareholders in a corporation have the power to bind the corporation to contracts.

A) True
B) False

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Question 33

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Retained earnings generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.

A company's stock is selling for $63.20 per share and its earnings per share is $3.60 for the current year.Calculate the price-earnings ratio.

Dividend yield is defined as the annual cash dividends per share divided by the market price per share of a company's stock.

Comfort Mattresses,Inc.sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share.The entry to record this transaction would be:

The cumulative net income and loss not distributed as dividends to a corporation's shareholders is called ________.

All stock dividends are recorded at par value so there would never be a credit to the paid-in capital in excess of par value account.

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

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

The ________ protects stockholders' proportional interest in a corporation by allowing them to purchase their proportional share of any common stock later issued by the corporation.

Djarleen Company has 10,000 shares of $10 par preferred stock,which were issued at par.It also has 250,000 shares of common stock outstanding,and its total stockholders' equity equals $4,000,000.The book value per common share is:

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.

All of the following regarding accounting for Treasury Stock under U.S.GAAP and IFRS is true except:

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.

Stock that has been issued and is held by stockholders is ________ stock.

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding.The journal entry to record the declaration of the cash dividend is:

A company is authorized to issue 750,000 shares of $2 par value common stock.Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: $\begin{array} { |l |l| } \hline \text { Jan. } 10 & \text { Sold } 102,000 \text { shares of common stock for } \$ 8 \text { cash per share. } \\\hline 15 & \text { Exchanged } 10,000 \text { shares of common stock for equipment with a market } \\&\text { value of } \$ 70,000\\\hline & \text { Exchanged } 500 \text { shares of common stock for } \$ 3,000 \text { of legal services incurred } \\\text { Feb. } 1&\text { during the company's organization. }\\\hline\end{array}$

Declaration of a stock dividend results in a liability being recorded.

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: