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Exam 13: Stockholders Equity

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Question 91

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Jenkins Services reported the following balances: $\begin{array} { | l | r | r | } \hline & \text { December } 31,2016 & \text { December } 31,2015 \\\hline \text { Net Income } & \$ 45,000 & \$ 42,000 \\\hline \text { Preferred Dividends } & 5,000 & 3,000 \\\hline \text { Total Stockholders' Equity } & 375,000 & 368,000 \\\hline \begin{array} { l } \text { Total Stockholders' Equity } \\\text { attributable to Preferred Stock }\end{array} & 40,000 & 24,000 \\\hline \begin{array} { l } \text { Number of common Shares } \\\text { Outstanding }\end{array} & 16,000 & 12,000 \\\hline\end{array}$ Compute earnings per share for 2016,price/earnings ratio for 2016,assuming the market price on December 31,2016 is $37.50 per share,and the rate of return on common stockholders' equity for 2016. (Show your computations and round to two decimal places. )

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Average number of common shares outstand...

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Question 92

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Which of the following is a reason for a company to announce a stock split?

A) to reward investors
B) to increase total stockholders' equity
C) to decrease the market price at which the stock is trading
D) to provide the shareholders with something of value,when the company cannot afford a cash dividend

E) B) and C)
F) All of the above

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Question 93

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When a previously declared dividend is paid,which of the following occurs?

Happy Holidays,Inc.has 110,000 shares of common stock issued and outstanding,with a par value of $0.03 per share.It declared a 17% common stock dividend; market value is $14 per share.Which of the following is the correct journal entry to record the transaction? (Round your answers to the nearest whole dollar. )

William Smith is a sole proprietor of a successful business.He is interested in incorporating to protect his personal assets.What are some disadvantages of organizing as a corporate entity?

For no-par stock there can be paid-in capital in excess of par.

On the ________,cash dividends become a liability of a corporation.

Thomas Business Supply reported a negative amount in Retained Earnings.What term describes this negative amount? What can cause this to happen?

Refer to the following information for Tangent Corporation: • Common Stock,$1.00 par,108,000 shares issued,99,000 shares outstanding • Paid-In Capital in Excess of Par-Common: $2,330,000 • Retained Earnings: $910,000 • Treasury Stock: 11,000 shares purchased at $33 per share If Tangent resold 1,300 shares of treasury stock for $23.00 per share,which of the following statements would be true?

Lafayette,Inc.was incorporated on January 1,2014.Lafayette issued 15,000 shares of common stock and 800 shares of preferred stock on that date.The preferred stock is cumulative,$100 par,with an 12% dividend rate.Lafayette has not paid any dividends yet.In 2017,Lafayette had its first profitable year,and on November 1,2017,Lafayette declared a total dividend of $44,000.What is the total amount that will be paid to common stockholders?

Stock dividends are distributed to stockholders in proportion to the number of shares that stockholders already own.

Flowers,Inc.had beginning retained earnings of $125,000 on January 1,2017.During the year,Flowers declared and paid $40,000 of cash dividends and earned $55,000 of net income.Prepare a statement of retained earnings for Flowers,Inc.for the year ending December 31,2017.

Greg's Grocery,Inc.has 45,000 shares of common stock outstanding and 8,000 shares of preferred stock outstanding.The common stock is $0.10 par value; the preferred stock is 7% noncumulative with a $100.00 par value.On October 15,2017,the company declares a total dividend payment of $51,000.What is the amount of dividend that will be paid for each share of common stock? (Round your answer to the nearest cent. )

Dalmatian Corporation's annual report is as follows. $\begin{array} { | l | r | r | } \hline & \text { March 31, 2016 } & \text { March 31, 2017 } \\\hline \text { Net Income } & \$ 360,000 & \$ 428,500 \\\hline \text { Preferred Dividends } & 0 & 0 \\\hline \text { Total Stockholders' Equity } & \$ 4,250,000 & \$ 5,102,000 \\\hline \text { Stockholders' Equity attributable to Preferred } & & \\\text { Stock } & 0 & 0 \\\hline \text { Number of Common Shares Outstanding } & 290,464 & 196,168 \\\hline\end{array}$ If the current market price is $23 on March 31,2016,compute the price/earnings ratio on March 31,2017.(Round any intermediate calculations and your final answer to the nearest cent. )

The statement of stockholders' equity ________.

Memorandum entry is an entry in the journal that notes a significant event but has no debit or credit amount.

Which of the following actions will increase the Common Stock account?

Madison Company earned net income of $75,000 during the year ended December 31,2016.On December 20,Madison declared the annual cash dividend on its 8% preferred stock (par value,$150,000)and a $0.50 per share cash dividend on its common stock (45,000 shares).Madison then paid the dividends on January 10,2017. Prepare the journal entries to record the declaration and the distribution of the dividends.Explanations are not required.

Gordon Corporation reported the following equity section on its current balance sheet.The common stock is currently selling for $12.00 per share. $\begin{array} { | l | r | } \hline \begin{array} { l } \text { Common Stock, } \$ 10 \text { Par, } 103,000 \text { shares authorized, } 58,000 \text { shares issued } \\\text { and outstanding }\end{array} & \$ 580,000 \\\hline \text { Paid-in Capital in Excess of Par-Common } & 125,000 \\\hline \text { Retained Earnings } & 302,000 \\\hline \text { Total Stockholders' Equity } & \$ 1,007,000 \\\hline\end{array}$ What would be the total stockholders' equity after a 15% common stock dividend?

Overton,Inc.had the following transactions in 2017,its first year of operations: • Issued 8,000 shares of common stock.Stock has par value of $0.01 per share and was issued at $40.00 per share. • Earned net income of $200,000. • Paid dividends of $8.00 per share. At the end of 2017,what is total stockholders' equity?