Exam 11: Reporting and Analyzing Stockholders Equity

Par value

Which of the following is not true of a corporation?

Denson, Inc. has 10,000 shares of 7%, $100 par value, non-cumulative preferred stock and 40,000 shares of $1 par value common stock outstanding at December 31, 2014. There were no dividends declared in 2013. The board of directors declares and pays a $120,000 dividend in 2014. What is the amount of dividends received by the common stockholders in 2014?

The declaration and distribution of a stock dividend will

On January 1, 2014, the Black Corporation had $2,000,000 of $10 par value common stock outstanding that was issued at par and Retained Earnings of $1,000,000. The company issued 140,000 shares of common stock at $15 per share on July 1. On December 15, the board of directors declared a 10% stock dividend to stockholders of record on December 31, 2014, payable on January 15, 2015. The market value of Black Corporation stock was $17 per share on December 15 and $16 per share on December 31. Net income for 2014 was $500,000. Instructions (1) Journalize the issuance of stock on July 1 and the declaration of the stock dividend on December 15. (2) Prepare the stockholders' equity section of the balance sheet for Black Corporation at December 31, 2014.

Berman Inc. has 6,000 shares of 8%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2013, and December 31, 2014. The board of directors declared and paid an $18,000 dividend in 2013. In 2014, $72,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2014?

The following information pertains to Marsh Company. Assume that all balance sheet amounts represent average balance figures. What is Marsh's payout ratio?

Under the corporate form of business organization

Giraldi Corporation's stockholders' equity section at December 31, 2013, appears below: Stockholders' equity Paid-in capital On June 30, 2014, the board of directors of Giraldi Corporation declared a 15% stock dividend, payable on July 31, 2014, to stockholders of record on July 15, 2014. The fair value of Giraldi Corporation's stock on June 30, 2014, was $16. On December 1, 2013, the board of directors declared a 2 for 1 stock split effective December 15, 2014. Giraldi Corporation's stock was selling for $18 on December 1, 2014, before the stock split was declared. Par value of the stock was adjusted. Net income for 2014 was $230,000 and there were no cash dividends declared. Instructions (a) Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split. (b) Fill in the amount that would appear in the stockholders' equity section for Giraldi Corporation at December 31, 2014, for the following items:

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Define par value, and discuss its significance in accounting.

Dividends in arrears on cumulative preferred stock

If a corporation declares a 10% stock dividend on its common stock, the account to be debited on the date of declaration is

Which of the following statements is not considered a disadvantage of the corporate form of organization?

On January 1, Ripken Corporation had 40,000 shares of $10 par value common stock outstanding. On March 17 the company declared a 10% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include a

The per share amount normally assigned by the board of directors to a large stock dividend is

On January 1 Weiss Corporation had 60,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following transactions occurred: Instructions (a) Prepare the entries, if any, on each of the three dates that involved dividends. (b) How are dividends and dividends payable reported in the financial statements prepared at December 31?

La Vida Corporation issued 24,000 shares of no-par value ordinary shares for €29.50 per share. Which of the following statements is true?

Information that is not generally reported for each class of stock on the balance sheet is

Brewer Inc. has 5,000 shares of 8%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2014, and December 31, 2013. The board of directors declared and paid a $15,000 dividend in 2013. In 2014, $60,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2014?