Exam 11: Contributed Capital

If a corporation grants a stock option to an employee on July 1,2010,that allows the employee to purchase stock at a price substantially below the stock's fair value at July 1,2010,an element of compensation expense should be recorded on the corporation's books.

No rights or privileges are associated with unissued stock.

Prepare entries in journal form without explanations to record the following transactions involving Dailey Corporation's $5 par value common stock: Apr. 1 Purchased 500 shares of its own common stock for \ 12 , the current market price. This is the first transaction involving its own stock engaged in by the company. May 1 Sold 100 of the shares purchased on April 1 for \ 15 . June 1 Retired 100 of the shares purchased on April 1 . The original issue price was \ 8 . July 1 Sold 200 of the shares purchased on April 1 for \ 10 .

The board of directors of Berweck Corporation declared a cash dividend on January 18,2010,to be paid on February 18,2010,to shareholders holding the stock on February 2,2010.Given these facts,the date February 2,2010,is referred to as the

Use the following information to answer the question below. The following accounts appear in the ledger of Sayre Corporation on December 31,20xx: Preferred Stock \ 30,000 Common Stock 56,000 Additional Paid-in Capital, Preferred 7,000 Additional Paid-in Capital, Common 18,000 Retained Earnings 40,000 A balance sheet prepared on December 31,20xx,would report total contributed capital of

The entry to close the Dividends account which has a balance of $10,000,at the end of an accounting period will be:

Red River Corporation has 24,000 shares of 11 percent noncumulative preferred stock and 60,000 shares of common stock outstanding.Par value for each is $10.The company paid no dividends last year.This year,a $100,000 dividend is paid.How much of the $100,000 is paid to the preferred shareholders?

Mercer Corporation has 200,000 shares of $10 stated value no-par common stock authorized,and 160,000 shares were outstanding during 2009.The following transactions relate to cash dividends of Mercer Corporation for the year ended December 31,2009.Prepare entries in journal form without explanations to record the following transactions:

Preferred stock is considered the residual equity of a corporation.

The purchase of treasury stock will result in

Issuing common and preferred stock generally has been popular among corporations.However,some companies have bought back their common stock.For example,because its stock had declined under the uncertainty of possible health care reforms,Bristol-Myers Squibb bought 25 million of its own shares.Other companies have been awash in cash because of the decline in interest rates,layoffs to cut costs,and decreased need to make new investments.Quaker Oats purchased 4.8 million of its own shares for $323 million and plans to purchase 5 million more.The Quaker Oats treasurer was quoted as saying,"We spend on new products,we make acquisitions,we raise the dividend,and we still can't soak up the cash." Sun Microsystems cut its outstanding shares by 9 percent with an aggressive buyback program,and PepsiCo purchased 50 million shares at a cost of $1.8 billion.For what reasons would a company buy back its own shares?

No entry is required on the date of record for a cash dividend.

Use the following information to obtain the ratios requested below.Where necessary,carry answers to one decimal place. Dividends per share: $.76 Market price per share: $40 Net income: $64,000 Stockholders' equity,beginning of year: $500,000 Stockholders' equity,end of year: $530,000 Earnings per share: $1.75 a. Dividends yield = _____________% b. Return on equity = _____________% c. Price/earnings (P/E) ratio = __________ times

Use the following information to obtain the ratios requested below.Where necessary,carry answers to one decimal place. Dividends per share: $.54 Market price per share: $30 Net income: $88,000 Average stockholders' equity: $625,000 Earnings per share: $1.25 A) Dividends yield = _____________% B) Return on equity = _____________% C) Price/earnings (P/E) ratio = __________times

Callable preferred stock is preferred stock that may be redeemed or retired at the option of the stockholder.

Once an owner of convertible preferred stock has converted to common,he or she cannot convert back to preferred.

Dividends in arrears pertain to noncumulative preferred stock.

Return on equity is measured in terms of

Dividends in arrears are disclosed as liabilities of a corporation.

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,$14,000; 2007,$18,000; 2008,$65,000; 2009,$30,000; 2010,$15,000.The amount of dividends received by the preferred stockholders during 2010 was