Exam 11: Shareholders Equity

Repurchasing shares increases the number of shares outstanding.

The repurchase of shares may result in a recognizable gain or loss.

The shareholders' equity section of Polar Industries Ltd. at December 31, 2020, included the following: $3 preferred shares, cumulative, 10,000 shares authorized, 9,000 shares issued $900,000 Common shares, 500,000 shares authorized, 400,000 shares issued 2,000,000 Dividends were not declared on the preferred shares in 2020 and are in arrears. On September 15, 2021, the board of directors declared dividends on the preferred shares for 2020 and 2021, to shareholders of record on October 1, 2021, payable on October 15, 2021. On November 1, 2021, the board of directors declared a $0.50 per share dividend on the common shares, payable November 30, 2021, to shareholders of record on November 15, 2021. Instructions Prepare the journal entries that should be made by Polar Industries for 2021. If no entry is needed write "No entry required."

Common shareholders have the right to vote at shareholder meetings.

Shares that have been issued and subsequently repurchased but not cancelled are called

Preferred shares that pay a fixed dividend for as long as the shares remain outstanding are called

The one class of shares that represent a company's basic voting rights are

Which of the following is the first date in the sequence required to pay dividends?

Dividends not declared in one year carry over to the next year for

Accumulated other comprehensive income is a revenue account reported on the statement of income.

A company may pay a one-time dividend if it has benefitted from an unusual gain.

At least one class of a company's common share must have all three of the following rights except

The date of record results in a legal obligation to pay the cash dividends.

Information to determine the amount of dividends declared and the amount of dividends paid during the year is found on which financial statement?

On December 31, 2020, Pekoe Corporation reported $3,000,000 in its Common Shares account (200,000 issued) and retained earnings of $1,000,000. During 2021, the following events occurred: 1. On July 1, the company issued 100,000 common shares at $17 per share. 2. On December 15, the board of directors declared a 15% stock dividend to common shareholders of record on December 31, payable on January 15, 2022. 3. The market value of Pekoe Corporation common shares was $16 per share on December 15 and $14 per share on December 31. 4. Profit for 2021 was $625,000. Instructions a) Record the issue of shares on July 1 and the declaration of the stock dividend on December 15. b) Prepare the shareholders' equity section of the statement of financial position at December 31, 2021.

Convertible preferred shares are convertible to common shares at the option of the shareholder.

Which of the following happens at the date of record of a cash dividend?

Why would a company prefer to issue shares? Instructions List the advantages and disadvantages to issuing additional shares.

The dividend payout ratio measures

Below is the financial data for Eric's Electric Energy Inc. for the year ended December 31, 2020: Instructions Calculate the following amounts: a) Price/earnings ratio b) Dividend payout ratio c) Dividend yield d) Return on shareholders' equity