Exam 13: Introduction to Corporations

Two classifications appearing in the contributed capital section of the balance sheet are

The feature that enables the preferred shareholders to exchange their preferred shares for common shares is the

A public corporation is a corporation that does not issue its shares for sale to the public.

Corporations have a

Return on equity can be calculated as average shareholders' equity divided by profit.

Creditors have access to corporate assets only to have their claims repaid by them.

Jacobs Corporation has the following shareholders' equity on December 31, 2014: -If 500 preferred shares are converted into common shares what is the dollar value of the common shares issued?

Burbon Ltd. is a private company reporting under ASPE. The adjusted trial balance at its fiscal year end, December 31, 2016, is shown below: Instructions a. Prepare a statement of retained earnings. b. Journalize the closing entries.

Canadian Tire Corporation is an example of a(n)

Retained earnings are the cumulative profits or losses since incorporation which have been retained within the corporation.

Tantramar Corporation has the following shareholders equity on July 31, 2013: -Assume that on June 15, 2014, Tantramar paid the preferred dividend for the current year (there were no dividends in arrears) and paid a dividend of $2 to each common shareholder. The company earned $45,000 in profit during 2014. The July 31, 2014 financial statements will show an ending balance in retained earnings of

Assume that company A is doing quite well and has healthy cash flow from operating activities. Its Board of Directors has decided to not pay any dividends to its shareholders for the foreseeable future. This is most likely because

DEN, Inc. has 1,000, $6, cumulative preferred shares issued at $100, and 50,000 common shares issued at $1, at December 31, 2010. What is the annual dividend on the preferred shares?

The concept of a "separate legal existence" refers to which form of business organization?

Pearl Holdings Inc. was incorporated on July 1, 2014 with authorized share capital of 1,000,000 common shares and 500,000 preferred $4-cumulative preferred shares, convertible to common shares at a rate of 10 common shares for each preferred share. During its first year of operations, Pearl had profit of $126,000, and declared no dividends. Pearl had the following transactions related to share capital during the year: Jul 1 2014 Issued 100,000 common shares for $2 each. Jul 1 2014 Issued 5,000 preferred shares for $75 each. Aug 15 2014 Issued 10,000 common shares for legal services received, valued at $25,000. Dec 1 2014 Issued 5,000 common shares at $2.25 each in exchange for equipment received. Mar 8 2015 Half of the preferred shares were converted to common shares. On this date, the market value of the common shares was $3.10 and the preferred share value was $80. Instructions a. Prepare the entries to record the share transactions described above. b. Prepare the shareholder equity section of Pearl's balance sheet at June 30, 2015, the date of its first year end. c. Calculate the return on equity for the first year of operations. Use the July 1, 2014 share capital as the beginning balance for the purpose of calculating average shareholder equity.

A corporation must have preferred shares.

Income statements for corporations are the same as the income statements for proprietorships except for the reporting of

Under ASPE, corporations that issue shares in return for noncash assets should record the transaction at

The authorization of share capital will

Retained earnings is