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Exam 18: Shareholders Equity

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Question 31

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The prescribed accounting treatment for stock dividends implicitly assumes that shareholders are fooled by "small" stock dividends and benefit by the market value of their additional shares.Explain this statement.Is it logical?

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For a stock dividend of less than 25%,a ...

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Question 32

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Outstanding common stock is:

A) Stock that is performing well on the New York Stock Exchange.
B) Stock that has been authorized by the state for issue.
C) Stock held in the corporate treasury.
D) Stock in the hands of shareholders.

E) B) and C)
F) B) and D)

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Question 33

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Two of the three primary account classifications within shareholders' equity are:

On January 1,2016,Gerlach Inc.had the following account balances in its shareholders' equity accounts. During 2016,Gerlach Inc.had several transactions relating to common stock. Required: Record the above transactions and events in journal entry format.

The changes in account balances for Allen Inc.for 2016 are as follows: Assuming the only changes in retained earnings in 2016 were for net income and a $25,000 dividend,what was net income for 2016?

During its first year of operations,Cole's Electronics Inc.completed the following transactions relating to shareholders' equity. January 5: Issued 1,000,000 shares of common stock for $25 per share. February 12: Issued 20,000 shares of common stock to accountants for $500,000 of professional services. The articles of incorporation authorize 5,000,000 shares of common stock with a par value of $1 per share and 1,000,000 preferred shares with a par value of $100 per share. Required: Record the above transactions in general journal form.

Boxer Company owned 20,000 shares of King Company that were purchased in 2014 for $500,000.On May 1,2016,Boxer declared a property dividend of 1 share of King for every 10 shares of Boxer stock.On that date,there were 50,000 shares of Boxer stock outstanding.The market value of the King stock was $30 per share on the date of declaration and $32 per share on the date of distribution.By how much is retained earnings reduced by the property dividend?

Accumulated other comprehensive income is reported:

The corporate charter sometimes is known as (a) :

On October 15,2016,a 5% stock dividend was declared and distributed.The market value of the common stock on this date was $32 per share.Fractional share rights represented 100,000 shares.Cash was paid in lieu of issuing fractional share rights.On the date of declaration and payment,the company had 10 million shares of common stock outstanding.The par value of the common shares was $5. Required: Prepare any necessary journal entries to record the above events.

The costs of legal,promotional,and accounting services necessary to effect the sale of shares are referred to as share issue costs.How are these costs recorded? Compare this approach to the way debt issue costs are recorded.

Accumulated other comprehensive income:

Common shareholders usually have all of the following rights except:

What is the difference between a stock split and a stock split effected in the form of a stock dividend?

The changes in account balances for Elder Company for 2016 are as follows: Assuming the only changes in retained earnings in 2016 were for net income and a $50,000 dividend,what was net income for 2016?

Corporations are formed in accordance with:

The shareholders' equity of Red Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock.The board of directors of Red declared cash dividends of $50,000 in 2016 after paying $20,000 cash dividends in 2015 and $40,000 in 2014.What is the amount of dividends common shareholders will receive in 2016?

The December 31,2016,balance sheet of MBI Company included the following: MBI completed the following transactions in 2016 relating to treasury stock: March 17: Reacquired 2 million shares at $10. May 17: Reacquired 2 million shares at $9. August 10: Issued 3 million shares at $12. Required: Assuming MBI uses the cost method,prepare journal entries to record the foregoing transactions on a weighted average basis.

On January 1,2016,the board of directors of Goby Inc.declared a $540,000 dividend.The following data is from the balance sheet of Goby on that date: How much is the liquidating dividend?

The corporate charter of Alpaca Co.authorized the issuance of 10 million,$1 par common shares.During 2016,its first year of operations,Alpaca had the following transactions: What amount should Alpaca report as additional paid-in capital ‒ excess of par,in its December 31,2016,balance sheet?