Exam 11: Reporting and Analyzing Stockholders Equity

Jason Hansen has invested $600,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Hansen stand to lose?

The return on common stockholders' equity is computed by dividing net income

The acquisition of treasury stock by a corporation increases total assets and total stockholders' equity.

Which of the following statements about treasury stock is true?

A corporation acts under its own name rather than in the name of its stockholders.

The tax laws can be a significant disadvantage of the corporate form of business.

A stockholder has the right to vote in the election of the board of directors.

Which of the following statements is not true about a 2-for-1 split?

Ferman Corporation had net income of $160,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2014. Ferman Corporation's common stockholders' equity at the beginning and end of 2014 was $870,000 and $1,130,000, respectively. Ferman Corporation's return on common stockholders' equity was

A disadvantage of the corporate form of business is

The Common Stock Distributable account is classified as a current liability.

Holden Packaging Corporation began business in 2014 by issuing 80,000 shares of $5 par common stock for $8 per share and 20,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2014 balance sheet, Holden Packaging would report

On January 1, Swanson Corporation had 80,000 ordinary shares with a €10 par value outstanding. On March 17, the company declared a 15% share dividend to shareholders of record on March 20. Market value of the shares was €13 on March 17. The entry to record the transaction of March 17 would include a

The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified.

Danley Corporation began business by issuing 200,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $40,000. The year-end balance sheet would show

On January 1, 2014, Browning Corporation had 75,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred: Net income for 2014 amounted to $951,000. Instructions Prepare journal entries to record the above transactions.

A corporation purchases 15,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

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 entry to record the transaction of March 17 would include a

Linda Merton asks, "Since stock dividends don't change anything, why declare them?" What is your answer to Linda?

Dividends are predominantly paid in