Exam 11: Reporting and Interpreting Stockholders Equity

A company purchased 1,000 shares of treasury stock for $38,000 cash.The shares were initially issued for $24,000 and had a $9,000 par value.Which of the following statements incorrectly describes the effect of the treasury stock purchase?

Most investors who are retired people prefer to receive their return on investment in common stock in the form of stock price appreciation rather than in dividends.

Employees who receive stock options as compensation:

The following information is provided for Bold Company for the year 2019: • Preferred stock,6%,$50 par value,1,000 shares issued and outstanding • Common stock,$100 par value,2,000 shares issued and outstanding • Dividends in arrears for three prior years (2016-2018) • Total dividends declared and paid in 2019 were $50,000. - How much of the 2019 dividend payment was paid to the preferred stockholders assuming the preferred stock is noncumulative?

Which of the following statements about earnings per share (EPS)is correct?

HighRise Company reported the following amounts of contributed capital in its stockholders' equity accounts as of January 1,2019: Indicate the journal entry to record each of the following transactions by entering the letter code corresponding to each account that would be debited and credited.Enter the code letter and the amount of each debit and credit (do not use dollar signs).The transactions,including the example,are not interrelated. Accounts

The dividend yield ratio is calculated as dividends per share divided by the number of shares outstanding.

The payment of a previously declared cash dividend has an overall effect of:

Coal,Inc.had the following amounts on its balance sheet on December 31,2018: During 2019,Coal Inc.reported net income of $69,300,declared cash dividends of $47,700,purchased additional treasury stock for $12,600,and experienced a foreign currency translation gain of $5,400.What amount will Coal report as total stockholders' equity at December 31,2019 on its statement of stockholders' equity?

Total stockholders' equity increases when treasury stock is sold for an amount less than its repurchase price.

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2019.The company held 50,000 shares of treasury stock and had 700,000 shares of common stock outstanding. Calculate the par value per share of the company's common stock.

Treasury stock is a corporation's own stock that was issued and then repurchased,and is still held by the corporation.

During 2020,Sanders Corporation prepared the following journal entry to record the declaration and payment of a cash dividend: The total par values of common and preferred stock outstanding were $55,000 and $40,000,respectively.No dividends were declared or paid during 2019. There are 7,500 shares of common stock held in treasury. The common stock has a par value of $2 per share. A.If the preferred stock is noncumulative,calculate the current dividend rate on the preferred stock. B.Calculate the number of common stock shares that received dividends. C.Calculate the dividend paid per share of common stock.

When a company issues common stock in exchange for cash,a cash inflow from a financing activity is reported.

Preferred stockholders do not have voting rights but do have a preference with respect to dividend payments.

Generally accepted accounting principles require a company to show two years of data on its statement of stockholders' equity.

Determine the effect of the following transactions on the financial statement components identified.Code your answers as follows: A: If the transaction results in an increase in the financial statement component. B: If the transaction results in a decrease in the financial statement component. C.If the transaction does not affect the financial statement component. Transaction 1: A cash dividend was declared. Net income _____ Total assets _____ Total liabilities ______ Stockholders' equity _____ Transaction 2: A previously declared cash dividend was paid. Net income _____ Total assets _____ Total liabilities ______ Stockholders' equity _____ Transaction 3: A 2-for-1 stock split was declared and distributed. Net income _____ Total assets _____ Total liabilities _____ Stockholders' equity _____ Transaction 4: A common stock dividend was declared and distributed. Net income _____ Total assets _____ Total liabilities _____ Stockholders' equity _____

Which of the following statements about treasury stock transactions is correct?

Marlin,Inc. ,declared a cash dividend of $40,000 in 2019 when the following stocks were outstanding: No dividends were declared or paid during the prior year. Compute the amount of cash that would be paid to each stockholder group under each of the following separate cases.Show the amount of current dividend and dividends paid in arrears wherever applicable.

Which of the following statements correctly describes either the dividend yield or the earnings per share?