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Exam 11: Reporting and Analyzing Equity

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Question 21

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A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000.The entry to record this exchange is:

A) Debit Land $70,000; credit Common Stock $50,000; credit Paid-In Capital in Excess of Par Value,Common Stock $20,000.
B) Debit Land $70,000; credit Common Stock $70,000.
C) Debit Land $50,000; credit Common Stock $50,000.
D) Debit Common Stock $50,000; debit Paid-In Capital in Excess of Par Value,Common Stock $20,000; credit Land $70,000.
E) Debit Common Stock $70,000; credit Land $70,000.

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

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Question 22

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A company made an error in calculating and reporting amortization expense in Year 1.The error was discovered in Year 2.The item should be reported as a prior period adjustment:

A) on the Year 1 statement of retained earnings.
B) on the Year 1 income statement.
C) on the Year 2 statement of retained earnings.
D) on the Year 2 income statement.
E) accounted for with a cumulative "catch-up" adjustment in Year 2.

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

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Question 23

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If a company has no preferred stock,basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

The date the directors vote to declare and pay a dividend is called the:

The journal entry to record the declaration of dividends on common stock includes a debit to either Dividends or Retained Earnings and a credit to Common Dividend Payable.

A stock split increases total stockholders' equity.

Common stock always carries a preference for receiving dividends over preferred stock.

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:

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.

A corporation had the following stock outstanding when the company's board of directors declared a $75,000 cash dividend in the current year: Allocate the cash dividend between the preferred and common stockholders assuming the preferred stock is noncumulative and nonparticipating.

Ultimate Sportswear has $100,000 of 8% noncumulative,nonparticipating,preferred stock outstanding.Ultimate Sportswear also has $500,000 of common stock outstanding.In the company's first year of operation,no dividends were paid.During the second year,the company paid cash dividends of $30,000.This dividend should be distributed as follows:

The price-earnings ratio reveals information about the stock market's expectations for a company's future earnings growth.

A corporation issued 5,000 shares of its $1 par value common stock in exchange for land (market value $30,000) and a building (market value of $100,000) .The entry to record this transaction would be:

On July 1,a corporation issued 15,000 shares of no-par common stock with a stated value of $3 per share in exchange for a tract of land having a market value of $215,000.Prepare the general journal entry to record this transaction.

A company has $2,400,000 in stockholders' equity that includes 500 shares of $50 par value noncallable preferred stock outstanding and 250,000 shares of common stock outstanding.Calculate the book value per (1)preferred share,and (2)common share.

Prior period adjustments are reported in the:

A stock dividend does not reduce a corporation's assets or its stockholders' equity.

Book value per share reflects the value per share if a company is liquidated at balance sheet amounts.

The stockholders' equity section of a company's year-end balance sheet follows: The preferred stock has a call price of $51.50 per share plus dividends in arrears.Only one year of dividends is in arrears.Calculate the book value per (1)preferred share,and (2)common share.

Growth stocks generally pay large dividends on a regular basis.