Exam 11: Contributed Capital

The price/earnings (P/E)ratio is a measure of investors' confidence in a company's future.

Holders of common stock must be made aware of possible restrictions on common dividends when the preferred stock is

Why might someone prefer to invest in a company by purchasing preferred stock rather than common stock?

Under what circumstances should compensation expense be recorded for a stock option plan? 5.Berman Corporation was organized during 20xx.In organizing,the company incurred the following costs: 1.Paid the state $900 for the corporate charter and related fees of incorporation. 2.Paid the attorney $2,500 for services rendered in connection with filing incorporation papers with the state. 3.Issued 500 shares of $5 par value common stock to an accountant in exchange for accounting services valued at $3,000. Prepare the entries in journal form necessary to record the above transactions without explanations.

Margil Industries has 40,000 shares of 9 percent cumulative preferred stock and 30,000 shares of common stock outstanding.Par value for each is $50.The company has paid no dividends for the past two years.This year,a $620,000 dividend is paid.How much of the $620,000 is paid to the common shareholders?

The net effects on a corporation of the declaration and payment of a cash dividend are to

On January 1,2010,Belmont Corporation had 50,000 shares of $10 par value common stock issued and outstanding.All 50,000 shares had been issued in a prior period at $15 per share.On February 1,2010,Belmont purchased 2,000 shares of treasury stock for $18 per share and later sold the treasury shares for $20 per share on March 2,2010.The entry to record the purchase of the treasury shares on February 1,2010,would be:

For accounting purposes,stated value is treated the same way as par value.

Stonehurst Corporation is authorized to issue 100,000 shares of $5 stated value common stock and 2,000 shares of $100 par value,6 percent preferred stock.Prepare entries in journal form without explanations to record the following transactions: July 15 Issued 1,000 shares of common stock to an attorney for a bill of $\$ 7,000$ in connection with the organization of the corporation. 25 Issued 2,000 shares of preferred stock for cash of $\$ 120$ per share. 27 Issued 10,000 shares of common stock in exchange for land for a plant site valued at $\$ 75,000$ . Aug. 1 Issued 5,000 shares of common stock for $\$ 35,000$ in cash.

The cost of treasury stock is deducted from total Contributed Capital and Retained Earnings in determining total stockholders' equity.

The board of directors carries out the day-to-day operations of the business.

Stockholders who own preferred stock usually have voting rights,whereas stockholders who own common stock usually do not have voting rights.

Honig Corporation had the following shares of stock outstanding on December 31,2010: Common stock,$50 par value,100,000 shares outstanding Preferred stock,8 percent,$100 par value,cumulative,10,000 shares outstanding Dividends were in arrears for 2008 and 2009.On December 31,2010,total cash dividends of $400,000 were declared.The total amounts payable to preferred stockholders and common stockholders,respectively,are

If the entry to record the retirement of treasury stock contains a credit to a Paid-in Capital,Retirement of Stock account,it is apparent that the

A company purchases 600 shares of its $100 par value common stock at $110 per share.It then reissues 100 shares at $114 per share.The entry upon reissue of the stock would be:

Outstanding shares of stock are

Underwriters typically charge 5 percent of the selling price to guarantee the sale of initial public offerings of stock.

Retained earnings consist of a pool of funds to be distributed to stockholders.

Dividends yield equals

Prepare in proper form the stockholders' equity section of the balance sheet from the following selected accounts and balances taken from the adjusted trial balance of Keller Corporation as of December 31,20xx.