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Exam 11: Reporting and Interpreting Owners Equity

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Question 21

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Slickers, Inc. had the following capital structure during 2014: Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for 2012 and 2013. Common stock, $100 par value, 2,000 shares issued and outstanding. The total dividends declared and paid during 2014 totaled $25,000. How much of the dividend is paid to the preferred stockholders during 2014 assuming the preferred stock is cumulative?

A) $3,500.
B) $7,000.
C) $10,500.
D) $14,500.

E) C) and D)
F) All of the above

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Question 22

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Which of the following statements is correct?

A) A treasury stock purchase for less than the amount of its original issue cost results in a decrease in total stockholders' equity.
B) A treasury stock purchase for less than the amount of its original issue cost results in an increase in total stockholders' equity.
C) A treasury stock purchase for an amount equal to the amount of its original issue cost results in no change to total stockholders' equity.
D) A treasury stock purchase for more than the amount of its original issue cost results in an increase in total stockholders' equity.

E) B) and D)
F) B) and C)

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Question 23

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Slickers, Inc. had the following capital structure during 2014: Preferred stock, 7%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for 2012 and 2013. Common stock, $100 par value, 2,000 shares issued and outstanding. The total dividends declared and paid during 2014 totaled $25,000. How much of the dividend is paid to the preferred stockholders during 2014 assuming the preferred stock is noncumulative?

Tractor Corporation was just formed. The following accounts with code letters are given below. Required: Indicate the appropriate journal entry for each transaction by entering the code letters and the correct amounts (do not use dollar signs). The transactions, including the example, are not interrelated unless otherwise stated.

Which of the following statements about earnings per share (EPS) is correct?

Total stockholders' equity increases when treasury stock is sold for an amount less than its cost.

Preferred stock often has a preference over common stock in the distribution of assets in the event of dissolution of the corporation.

A company purchased treasury stock for $19,000. The treasury stock was initially issued for $12,000 and had a $5,000 par value. Which of the following statements correctly describes the effects of the treasury stock purchase?

Dora Company declared and distributed a 10% stock dividend on 20,000 shares of issued and outstanding $5 par value common stock. The market price per share was $9 on the declaration date and was $10 on the distribution date. Which of the following correctly describes the accounting for the declaration and distribution of the stock dividend?

Which of the following statements incorrectly describes earnings per share?

Which of the following statements is false?

DRP, Inc. issued 50,000 shares of its own $50 par value preferred stock for cash of $110 per share, and issued 200,000 shares of its no-par common stock for cash of $40 per share. Required: Prepare the required journal entries for the issuance of each class of stock.

Which of the following statements is false?

Marlin, Inc., declared a cash dividend of $40,000 in 2013 when the following stocks were outstanding: $\begin{array}{ll}\text {Common stock 20,000 shares, par \$ 15 }&\$300,000\\\text {Preferred stock, 6 \%, 2.500 shares, par \$ 10 }&25,000\\\end{array}$ No dividends were declared or paid during the prior year. Compute the amount of cash that would be paid to each stockholder group under each of the following separate cases.

The declaration and issuance of a stock dividend results in a reduction of the issuing corporation's total stockholders' equity.

Which of the following statements is not correct?

Irish Corporation issued (sold) 10,000 shares of its no-par common stock for $70 per share. The bylaws established a stated value of $10 per share. The transaction would increase the common stock account on the balance sheet by how much?

Assume the following capital structure: Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2011-2013) . Common stock, $100 par value, 2,000 shares issued and outstanding. Total dividends declared and paid in 2014 were $50,000. How much of the 2014 dividend will be paid to the common stockholders assuming the preferred stock is noncumulative?

CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December 31, 2014. During the year ended December 31, 2015, CBA reported net income of $10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for $20,000. What is total stockholders' equity as of December 31, 2015?

Constance Corporation reported a $750,000 balance in its common stock account at the end of 2014. The company held 50,000 shares of treasury stock and had 700,000 shares outstanding. Required: Calculate the par value per share of the company's common stock.