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Exam 11: Accounting for Equity

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Question 51

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A corporation has $1,750,000 in stockholders' equity and 350,000 shares of common stock outstanding. Calculate the book value per common share.

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$1,750,000/350,000 s...

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Question 52

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Owners of preferred stock often do not have:

A) Ownership rights to assets of the corporation.
B) Voting rights.
C) Preference to dividends.
D) The right to sell their stock on the open market.
E) Preference to assets at liquidation.

F) All of the above
G) C) and D)

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Question 53

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Authorized stock is the total number of shares outstanding.

A newly formed company sold stock for $545,000. The shares had a par value of $5 each. After the transaction, the Paid-In Capital in Excess of Par, Common Stock, account had a balance of $215,000. How many shares did the company sell?

Stocks that pay relatively large cash dividends on a regular basis are referred to as:

A company reported $990,000 in net income for the current year. Total weighted-average number of common shares outstanding are equal to 150,000 shares and the year-end market price is $79.20 per common share. Calculate the company's price-earnings ratio.

Explain how to compute book value per share and discuss how it can be used to analyze the financial condition of a corporation.

A corporation had the following stock outstanding when the company's board of directors declared a $95,000 cash dividend during the current year: $\begin{array}{|l|r|}\hline \text { Preferred stock, } \$ 100 \text { par, } 6 \%, 5,000 \text { shares issued } & \$ 500,000 \\\hline \text { Common stock, } \$ 10 \text { par, } 75,000 \text { shares issued } & \underline{750,000} \\\hline \text { Total } & \$ 1,250,000 \\\hline\end{array}$ Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is cumulative and nonparticipating and dividends are one year in arrears.

___________________________ are corrections of material errors in prior period financial statements.

A company has $100,000 of 10% noncumulative, nonparticipating, preferred stock outstanding and $150,000 of common stock outstanding. In the company's first year of operation, it paid no dividends, but during the second year, it paid cash dividends of $25,000. Compute the dividends to be distributed to (1) preferred shares and (2) common shares.

_______________________ are responsible for and have final authority for managing a corporation's activities.

When all of the authorized shares have the same rights and characteristics, the stock is referred to as:

A company issued 60 shares of $100 par value stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

On August 31, 2013, Victory Corporation's common stock is priced at $30 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows. Assume that the company declares and immediately distributes a 35% stock dividend. $\begin{array}{lr}\text { Common stock — } \$ 7 \text { par value, } 95,000 \text { shares authorized, } 38,000 \text { shares }\\\text { issued and outstanding } & \$ 266,000 \\\text { Paid-in capital in excess of par value, common stock } & 100,000 \\\text { Retained earnings } & 366,000 \\\text { Total stockholders' equity } & \$ 732,000\end{array}$ What is the total amount in the Paid-In Capital account immediately after the stock dividend?

The amount of income earned per share of a company's common stock is known as:

Victory Corporation issues 17,000 shares of its $2 par value common stock for $152,025 cash on February 20. What is the appropriate journal entry to record this transaction?

Explain the components of the statement retained earnings and identify the special items that are reported in it.

The account used to record a premium on issued stock is titled ______________________________________________.

______________________________________ is the stockholders' equity applicable to common shares divided by the number of common shares outstanding.

A company has a market value per share of $73.00. Its net income is $1,750,000 and the weighted-average number of shares outstanding is 350,000. The company's price-earnings ratio is equal to: