Exam 11: Reporting and Interpreting Stockholders Equity

On February 16,a company declares a 34¢ dividend to be paid on April 5.There are 1,900,000 shares of common stock issued and outstanding.The entry recorded by the company on February 16 includes a debit to:

A company has outstanding 10 million shares of $2 par common stock and 1 million shares of $4 par preferred stock.The preferred stock has an 8% dividend rate.The company declares $300,000 in total dividends for the year.Which of the following is correct if the preferred stockholders only have a current dividend preference?

A company declared a $0.80 per share cash dividend.The company has 100,000 shares authorized,45,000 shares issued,and 42,000 shares of common stock outstanding.What is the journal entry to record the dividend declaration?

When a stockholder sells its shares to another person for more than its original cost,the corporation:

A corporation declared a stock dividend on November 1 and issued 9,000 shares of stock to its stockholders.Prior to the dividend,the balance in Retained Earnings was $850,000,the number of shares of $5 par value stock issued and outstanding was 60,000,and the market value of the stock was $12.This stock dividend will cause total stockholders' equity to:

Contributed capital is found in the ______ section of the ______:

A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share.The entry to record this transaction includes a debit to Cash for:

Treasury stock is reported in the:

Complete the table below by filling in the Formula blank with the letter that corresponds to the correct formula for each ratio and filling in the Interpretation blank with the letter that corresponds to the interpretation provided.Not all ratio formulas and interpretations will be used. Ratio Formulas A.365 ÷ Inventory Turnover B.(Sales - Cost of Goods Sold)÷ Sales C.Net Income ÷ Sales D.Net Operating Income ÷ Interest Expense E.(Net income - Preferred dividends)÷ Average number of common shares outstanding F.Total Liabilities ÷ Total Assets G.Current stock price (per share)÷ Earnings per Share H.(Net income - Preferred dividends)÷ Average common stockholders' equity Ratio Interpretations A.The portion of sales that is attributable to merchandise profit. B.Ability of a company to pay its short-term debts as they come due. C.The percent of each sales dollar that is left over after covering costs and expenses. D.How many times more than the current year's earnings investors are willing to pay for a company's common stock E.Ability of a company to quickly pay its short-term debts as they come due. F.The portion of a company's total financing that comes from debt. G.The amount of income generated for each share of common stock owned by stockholders H.How effectively a company is using its assets to generate revenue. I.The amount of income earned for each dollar of common stockholders' equity.

A corporation's charter establishes the number of shares of stock that will be issued in an initial public offering (IPO).

Income tax expense would be found on the income statement of a corporation,but not on the income statement of a sole proprietorship.

On the date of record for a dividend,the company:

The par value of stock indicates what the stock is worth.

If a company's P/E ratio is 24 and the company's EPS is $1.50,then the company's stock price is:

For a business to be considered a corporation:

Which of the following statements about stock options is not correct?

Corporations can raise large amounts of money because:

Before dividends can be paid to common stockholders,if the preferred stock is _____,any ______ must be paid to the preferred stockholders.

Choose the appropriate term to match the term and the definition.Not all definitions will be used. Term: 1._____ Corporation 2._____ Par Value 3._____ Growth Investment 4._____ LLC 5._____ Current Dividend Preference 6._____ Partnership 7._____ Market Value 8._____ Income Investment 9._____ Cumulative Dividend Preference 10._____ Sole Proprietorship Definition: A.When preferred stockholders are paid dividends before other stockholders. B.When stockholders prefer to receive dividends at the end of the year rather than each quarter. C.The current stock price. D.A company that issues stock on one of the major stock exchanges. E.An unincorporated business that is owned by a single individual. F.A stock that is currently selling for its original issue price. G.A company that has a separate legal identity from its owners. H.When companies are obligated to pay preferred stockholders past dividends not yet distributed before paying dividends to owners of common stock. I.The nominal value per share of stock set by the company's charter. J.Stock of companies that tend to reinvest earnings to provide for greater future sales and profits. K.A company that is like a partnership in nature except that it has limited liability. L.Stock of companies that tend to pay relatively high dividends compared to the stock price. M.An unincorporated business owned by two or more individuals.

Corporations will declare stock dividends in order to: