Exam 11: Contributed Capital

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 declaration of the dividend on June 14,2010,are to

Beckham Corporation has 3,000 shares of $100 par value,7 percent cumulative preferred stock,and 10,000 shares of $10 par value common stock outstanding during its first five years of operation.Beckham Corporation paid cash dividends as follows: 2006,$30,000; 2007,$0; 2008,$65,000; 2009,$30,000; 2010,$15,000.The amount of dividends received by the common stockholders during 2009 was

Why must a corporation have sufficient retained earnings before it may declare cash dividends?

The entry to record the retirement of treasury stock will include a debit to Common Stock for the amount of the cost to retire the shares.

Financing a business with common stock is less risky than financing it with bonds.

Treasury shares are shares that are issued but not outstanding.

If Willis Corporation has 80,000 shares of common stock authorized,50,000 shares of common stock issued,and holds 12,000 shares of common stock as treasury stock,the total number of outstanding shares of Willis Corporation amounts to

The excess of the issuance price over the stated value of a no-par common stock should be credited to the

A corporation is a separate entity for legal purposes.

Treasury stock usually is recorded at par value when purchased.

On June 1,2008,Will Oldman,treasurer of A-One Corporation,received an option to purchase 2,000 shares of A-One $5 par value common stock for $20 per share any time during 2009 or 2010.Oldman exercised his option on May 14,2009.The market price of the stock was $20 per share on June 1,2008,and $25 per share on May 14,2009.Provide the entry in journal form to record the exercise of the option on A-One's books.Show computations.(Omit explanation.)

A corporation records a dividend-related liability

The death of a stockholder results in the dissolution of the corporation.

Compensation expense related to employee stock option plans is to be measured by the excess of the

The information that follows pertains to stockholders' equity data of the Keswick Corporation on December 31,20xx.Compute the amount of each item indicated by a letter in the listing below.Round answers to two decimal places. Par value per common share \2 0 Balance of Common Stock account text a No. of shares authorized 20,000 No. of shares issued and outstanding 150,000 Balance of Additional Paid-in Capital account \b Balance of Retained Earnings account \5 0,000 Total contributed capital \ c Total stockholders' equity \ 510,000

The contributed capital of a corporation does not include

Start-up and organization costs

The sale of shares in a corporation by one stockholder to another affects the total capital of the corporation.

In its 2010 annual report,Gamma Company indicated that the number of common shares held in the treasury decreased from 45,546,171 in 2009 to 3,397,381 in 2010.The following also was reported: By Board authorization,effective December 31,2010 the Company canceled 50 million shares of common stock held in treasury.As a result of the cancellation,common stock decreased by $125 million,capital in excess of par value of stock decreased by $228 million,and retained earnings decreased by $3,119 million. The shares canceled or retired represent almost 25 percent of the shares of common stock issued by Gamma.Explain the accounting for the treasury shares by Gamma.Did the company buy any treasury shares during the year? Prepare the entry in journal form that was made to record the cancellation or retirement of the treasury shares.At what average price were the treasury shares purchased,and at what average price were they originally issued? What do you think was management's reason for purchasing the treasury shares? (Omit explanations.)

The dividends yield is measured in terms of "times."