Exam 11: Reporting and Interpreting Stockholders Equity

If the company pays a $100,000 dividend, and the preferred stock is cumulative and three years' dividends are in arrears, what is the amount the preferred stockholders will receive?

Horton Company began business on January 1, 2011 by issuing all of its 1,000,000 authorized shares of its $1 par value common stock for $20 per share. On June 30, they declared a cash dividend of $1 per share to stockholders of record on July 31. They paid the cash dividend on August 30. On November 1, Horton reacquired 200,000 of its own shares of stock for $25 per share. On December 22 they resold half of these shares for $30 per share. a. Prepare all of the necessary journal entries to record the events described above. b. Prepare the Stockholders' Equity section of the Balance sheet as of 12/31/2011 assuming that the Net Income for the year was $3,000,000.

The market value of stock is the par value of the stock.

Assume the company paid a dividend of $5 per share on August 3. What is the total amount of the dividends that would be paid to the common stockholders?

Which of the following statements would NOT explain why a company may want to repurchase its stock?

Which of the following statements is NOT true about the par value of common stock?

The effect of a stock dividend is to:

The combined effect of the declaration and payment of a cash dividend on a company's financial statements is to:

A company issued 8% preferred stock with a $100 par value. This means:

The return on equity ratio is calculated as:

The corporate form of business limits the legal liability of its owners.

The liability for dividends is recorded on the date of record.

All else equal, when companies make stock repurchases:

IBM issues 200,000 shares of stock with a par value of $0.01 for $150 per share. Three years later, it repurchases these shares for $80 per share. IBM records the repurchase in which of the following ways?

Typically, all other things equal, a profitable company that pays little or no dividends:

If a company's EPS and ROE rise:

A corporation declared and issued a 15% stock dividend on November 1. Prior to the dividend, the balance in retained earnings was $850,000, the number of shares of $5 par value stock issued and outstanding was 60,000, and the market value of the stock was $12. The amount of the change in total stockholders' equity as a result of recording this stock dividend is:

A company has net income of $5.6 million. Stockholders' equity at the beginning of the year is $32.55 million and, at the end of the year, it is $38.15 million. The only change to stockholders' equity came from net income. The ROE ratio is approximately:

You form a partnership with your best friend. You have contributed 65% of the capital and can claim 65% of the net income. At the end of the first year, you discover that your partner has run up $40,000 in debt using the business' credit card. The maximum you could be liable for is:

The EPS is approximately: