Exam 15: Contributed Capital

Assume common stock is issued to employees as a result of exercising stock purchase rights issued under a noncompensatory share purchase plan. Which of the following accurately describes the effect on the company's income, paid-in capital, and retained earnings, respectively?

Exhibit 15-3 On January 1, 2016, Howard, Inc. granted to a key executive a fixed compensatory share option plan for 1,000 shares of $4 par common stock for $30 a share. The fair value per option on that date was $14. The service period extended through December 31, 2017. -Refer to Exhibit 15-3. Which balance sheet disclosure would be correct at December 31, 2016?

When recording the conversion of preferred stock into common stock, if the total contributed capital eliminated in regard to the preferred stock is less than the common stock par value, the difference is debited to

Exhibit 15-5 On January 1, 2016, Roberts Company adopts a compensatory share option plan and grants 40 executives 1,000 shares each at $30 a share. The fair value per option is $7 on the grant date. The company estimates that its annual employee turnover rate during the service period of three years will be 4%. -Refer to Exhibit 15-5. At the end of 2017, the company estimates that the employee turnover will be 5% a year for the entire service period. At the end of 2018, only 30,000 options vest as only 30 of the 40 executives actually remain. The compensation expense for 2018 will be Round off turnover calculations to three decimal places and answer to the nearest dollar.)

Toronto, Inc. issued 4,000 shares of $100 par preferred stock at $155 a share. Each share of stock has a warrant attached to it that allows the holder to purchase one share of $20 par value common stock at $50. Shortly after the preferred stock was issued, the stock sold for $150 ex-rights and the warrants sold for $10 each. Required: a. Prepare the journal entry to record the issuance of the preferred stock. b. Prepare the journal entry to record the exercise of 2,200 of the warrants. c. Prepare the journal entry to record the expiration of the remaining 1,800 warrants.

An open corporation does not allow the sale of their stock to the general public, only to investment capital brokers.

On January 1, 2016, Microprocessing Inc. awarded a fixed compensation stock option plan to 40 executives. The plan allows each executive to buy 2,000 shares of the company's $10 par common stock for $25 a share after a four- year service period. The fair value of each option on the grant date is $12. The company expects an annual executive turnover rate of 4%. In 2017, the rate changed to 2% for the entire service period. On December 31, 2019, 60,000 options vest and the rest are forfeited. On January 5, 2020, 10 executives of Microprocessing exercised their options. Required: a. Prepare the journal entries for 2016 through 2019. b. Prepare the journal entry for January 5, 2020.

When retiring treasury stock, retained earnings could be affected under which of the following methods?

Which of the following statements concerning treasury stock is true?

When a company carries out a stock split, the company usually

Exhibit 15-2 Lawrence, Inc., entered into a subscription contract with several subscribers that calls for the purchase of 2,000 shares of $5 par common stock for $15 a share. The contract calls for a 20% down payment and specifies that any amounts not paid within the contract period will be forfeited in full. -Refer to Exhibit 15-2. Lawrence received final payment 80%) on 1,800 shares and issued those shares. Subscribers defaulted on 200 shares. The entries to record receipt of final payment and issuance of 1,800 shares would include a

All of the following would appear in the contributed capital section of shareholders' equity on the balance sheet except

A preemptive right is