Exam 11: Reporting and Interpreting Owners Equity

Assume the following capital structure: Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2011-2013). Common stock, $100 par value, 2,000 shares issued and outstanding. Total dividends declared and paid in 2014 were $50,000. How much of the 2014 dividend will be paid to the preferred stockholders assuming the preferred stock is cumulative?

On December 15, 2013, the board of directors of Cross Corporation declared a cash dividend, payable on January 8, 2014 of $.80 per share on the 2,000,000 common shares outstanding. On December 15, 2013, Cross Corporation should

A company purchased 1,000 shares of treasury stock for $38,000 cash. The treasury stock was 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?

RKJ Company has provided the following: • 100,000 shares of $5 par value common stock are authorized • 70,000 shares have been issued • 65,000 shares are outstanding Which of the following statements is correct?

Net income decreases when treasury stock is sold for an amount less than its cost.

The dividend yield ratio increases when the market price per share increases.

Wendell Company provided the following pertaining to its recent year of operation: • Common stock with a $10,000 par value was sold for $50,000 cash. • Cash dividends totaling $20,000 were declared, of which $15,000 were paid. • Net income was $70,000. • A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value and a $23,000 market value. • Treasury stock costing $9,000 was sold for $7,000. How much did Wendell's total stockholders' equity increase during the recent year of operation?

On December 31, 2014, Brave Corporation reported the following on its balance sheet: Cash \ 22,000 Treasury stock ( \ 8 per share, at cost) (16,000) Retained earnings 130,000 Common stock, par \ 5; (authorized 100,000 shares) 400,000 Capital in excess of par ? Total contributed capital 540,000 Required: Prepare the stockholders' equity section of the balance sheet.

Assume the following capital structure: Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2011-2013). Common stock, $100 par value, 2,000 shares issued and outstanding. Total dividends declared and paid in 2014 were $50,000. How much of the 2014 dividend will be paid to the preferred stockholders assuming the preferred stock is cumulative?

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

The declaration and distribution of a 2-for-1 stock split results in a reduction of retained earnings.

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

Which of the following journal entries does not reflect the initial cash sale of shares of common stock? A. Cash $\quad$ Common stock (no par) B. Cash $\quad$ Common stock (par value) $\quad$ Capital in excess of par C. Cash $\quad$ Common stock (stated value) D. Cash $\quad$ Common stock (stated value) $\quad$ Gain on sale of stock

Which of the following statements is true about partnership accounting?

Which of the following statements is false?

Wendell Company provided the following pertaining to its recent year of operation: • Common stock with a $10,000 par value was sold for $50,000 cash. • Cash dividends totaling $20,000 were declared, of which $15,000 were paid. • Net income was $70,000. • A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value and a $23,000 market value. • Treasury stock costing $9,000 was sold for $7,000. How much did Wendell's contributed capital increase during the recent year of operation?

A company's assets and stockholders' equity both decrease when a cash dividend is declared by its board of directors.

Assume the following capital structure: Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2011-2013). Common stock, $100 par value, 2,000 shares issued and outstanding. Total dividends declared and paid in 2014 were $50,000. How much of the 2014 dividend will be paid to the preferred stockholders assuming the preferred stock is noncumulative?

For the listed items below, identify the effects on cash flow from financing activities as increasing (I), decreasing (D), or (N) having no effect on financing cash flows: Effect on Financing Cash Flows Issued previously unissued shares of common stock Cash dividend Repurchase of common shares for treasury Stock split Exercise of stock options Reissuance of treasury shares Stock dividend

At the end of 2014, Washington Corporation reported a $40,000 balance in its common stock account (par value $1 per share). The treasury stock account balance was $720 (cost $6 per share). During 2014, the company declared and paid a cash dividend of $1.50 per share. Required: Calculate the total amount of the 2014 cash dividend.