Exam 11: Contributed Capital

Use the following information to answer the question below. The following transactions involving Lupine Corporation occurred during the year: Apr. 1 Purchased 2,000 shares of its own preferred stock for $\$ 20$ , the current market price. This is the first transaction involving its own stock engaged in by the company. May 3 Sold 400 of the shares purchased on April 1 for $25 per share. June 5 Retired 600 of the shares purchased on April 1. The original issue price was $\$ 10$ . The par value of the stock is $\$ 5$ . The entry to record the May 3 transaction would be:

Mertz Motors Corporation has 2,000,000 authorized shares of $10 par value common stock.As of June 30,20xx,there were 1,000,000 shares issued and outstanding.On June 30,20xx,the board of directors declared a $0.20 per share cash dividend to be paid on August 1,2010,to shareholders of record on July 15,20xx.Prepare the necessary entries in journal form to be recorded on (a)the date of declaration,(b)the date of record,and (c)the date of payment.(Omit explanations.)

A liquidating dividend is

Cash dividends become a liability of a corporation when the stock goes ex-dividend.

How is it possible for a corporation to have more shares issued than it has outstanding?

The board of directors of Irondale Corporation declared a cash dividend of $2.50 per share on 57,000 shares of common stock on June 14,2010.The dividend is to be paid on July 15,2010,to shareholders of record on July 1,2010.The effects of the entry to record the payment of the dividend on July 15,2010,are to

A corporation has 10,000 shares of 8 percent cumulative preferred stock and 20,000 shares of common stock outstanding.Par value for each is $100.No dividends were paid last year,but this year a $200,000 dividend is paid.How much of this $200,000 goes to the holders of common stock?

Holders of preferred stock normally do not have

Paloma Corporation had 5,000 shares of $100 par value,9 percent cumulative preferred stock and 30,000 shares of $10 par value common stock outstanding during each of its first four years of operation.The following amounts of cash dividends were paid during the years indicated: 2007,$0; 2008,$80,000; 2009,$220,000; 2010,$270,000.Determine the cash dividends per share paid to the preferred and common stockholders during each of the four years.

In the rare instance when a par value stock is issued at a cash price below par,the excess of the par value over the amount of cash received should be

On its December 31,2009,balance sheet,Montrose Corporation reported its stockholders' equity as follows: Common stock- \ 5 par value, 100,000 shares authorized, 50,000 shares issued and outstanding \ 250,000 Additional paid-in capital 125,000 Retained earnings Total stockholders' equity During 2010,the following transactions occurred: Reacquired 2,500 shares at $7 per share. Sold 1,200 shares of treasury stock at $8 per share. Sold 500 shares of treasury stock at $6 per share. Net income for 2010 amounted to $80,000. a. Prepare the entries in journal form for the three transactions involving treasury stock. (Omit explanations.) b. Compute the amount of total contributed capital to be reported on the December 31, 2010, balance sheet.

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 Pathway Corporation on June 30,20xx. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Partial Adjusted Trial Balance }$ Account Debit Credit Common Stock- \ 10 stated value, 50,000 shares authorized, 45,000 shares outstanding 450,000 Preferred Stock- \ 100 par value, 8 percent cumulative convertible, 3,000 shares authorized and outstanding 300,000 Additional Paid-in Capital, Preferred 15,000 Additional Paid-in Capital, Common 75,000 Retained Earnings 30,000

One disadvantage of a corporation is the lack of mutual agency.

Compensation expense related to employee stock options is recorded on a corporation's books only when the option price exceeds the current market price at the date the options are granted.

If there is no change in the number of shares authorized and issued from one year to the next,but there is a change in the number of shares outstanding on those same dates,how would you explain that change?

When shares of preferred stock may be redeemed by the corporation at a certain price,the shares are said to be

To evaluate the amount of dividends they receive,investors use the ratio called

The word preferred in the phrase preferred stock means that an owner of preferred stock has some advantages over a bondholder.

All of the following normally are found in a corporation's stockholders' equity section except

Convertible preferred stock is preferred stock that may be exchanged for