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Exam 13: Accounting for Corporations

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Question 31

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____________is the annual amount of cash dividends per share distributed to common shareholders relative to the stock's market price.

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Question 32

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A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

A) A $1,800 credit to Common Stock.
B) A $1,800 debit to Legal Expenses.
C) A $1,800 credit to Cash.
D) A $1,300 credit to Paid-in Capital in Excess of Par Value, Common Stock.
E) A $300 debit to Organization Expenses.

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Question 33

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

A stock dividend is recorded with a transfer from:

The Discount on Common Stock account reflects:

All of the following statements regarding stock dividends are true except:

The number of shares that a corporation's charter allows it to sell is referred to as:

A corporation declared and issued a 15% stock dividend on October 1. The following information was available immediately prior to the dividend: $\begin{array}{lrr}\text { Retained earnings } & \$ 750,000 \\\text { Shares issued and outstanding } & 60,000 \\\text { Market value per share } & \$ 15 \\\text { Par value per share } & \$ 5\end{array}$ The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

Given the following information about a corporation's current year activities, compute the retained earnings for the current year. $\begin{array} { l l } \text { Retained earnings, December } 31 \text { (prior year) } & \$ 280,000 \\\text { Cost of goods sold } & \$ 90,000 \\\text { Other operating expenses } & \$ 54,000 \\\text { Cash dividends } & \$ 31,800 \\\text { Correction of understatement of net income in prior } & \\\text { period (inventory error) } & \$ 23,000 \\\text { Stock dividends } & \$ 20,000 \\\text { Net income } & \$ 36,000\end{array}$

A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:

When no-par stock is not assigned a stated value, the total amount received is recorded in the Common Stock account.

A corporation had stockholders' equity on January 1 as follows: Common Stock, $1 par value, 1,500,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $1,100,000; Retained Earnings, $2,300,000. Prepare journal entries to record the following transactions: Feb. 15 The board of directors declared a 10% stock dividend to stockholders of record on March 1, to be issued on April 15. The stock was trading at $12 per share prior to the dividend. Mar. 31 Sold 100,000 shares of common stock for $13 per share. Apr. 15 Issued the stock dividend.

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

A company's board of directors votes to declare a cash dividend of $.75 per share of common stock. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows: $\begin{array} { l | l } \text { Common stock, \$5 par value, } 1,000,000 \text { shares } & \$ 2,500,000 \\\text { authorzed, 500,000 shares istued ...... } & \\\hline \text { Paid-in capital in excess of par, common stock } \ldots & 1,000,000 \\\hline \text { Retained earnings } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 3,000,000\end{array}$ The following selected transactions occurred during the current year: Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 20. The stock was selling for $8 per share. Mar. 9 Distributed the stock dividend. May 1 A cash dividend of $0.30 per share was declared by the board of directors to stockholders of record on May 20, payable June 1. June 1 Paid the cash dividend. Aug. 20 The board decided to split the stock 4-for-1, effective on September 1. Sept. 1 Stock split 4-for-1. Dec. 31 Earned a net income of $800,000 for the current year. Prepare a statement of retained earnings as of December 31 of the current year.

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

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

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. -The company has no preferred stock. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

A corporation reports the following year-end stockholders' equity: $\text { Paid-in capital: }$ $\begin{array}{|l|c|}\hline \begin{array}{l}\text { Preferred stock, 8\%, 100,000 shares } \\\text { authorized, 50,000 shares issued }\end{array} & \$ 2,500,000 \\\hline \text { Paid-in capital in excess of par, Preferred} & 125,000 \\\hline \begin{array}{l}\text { Common stock, } \$ 1 \text { par, } 5,000,000 \text { shares } \\\text { authorized, } 4,000,000 \text { shares issued }\end{array} & 4,000,000 \\\hline \text { Paid-in capital in excess of par, Common } & 1,200,000 \\\hline \text { Total paid-in capital } & \$ 7,825,000 \\\hline \text { Retained earnings} & 10,675,000 \\\hline\text { Total stockholders' equity }&\$18,500,000\\\hline\end{array}$ Determine the following: (1)Par value for the preferred stock. (2) Book value per share for both preferred stock and common stock assuming no dividends in arrears.