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Exam 11: Reporting and Interpreting Stockholders Equity

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Question 41

Multiple Choice

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The journal entry to record a large stock dividend includes a:

A) debit to Retained Earnings.
B) credit to Cash.
C) debit to Common Stock.
D) credit to Additional Paid-in Capital.

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

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Question 42

Multiple Choice

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As of November 29,it appears that Notel will report earnings per share (EPS) of $1.15 for the quarter ended November 30.Which of the following events would cause this EPS number to decrease,assuming the event occurs the morning of November 30?

A) The company pays a supplier for inventory bought on account.
B) The company declares, but does not pay, a cash dividend.
C) The company purchases 10 shares of common stock in another company.
D) The company reissues the treasury stock it holds.

E) None of the above
F) All of the above

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Question 43

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Stock splits and large stock dividends have which of the following similarities or differences in their effects and requirements for a journal entry?

The information below was extracted from the most recent financial statements of Milton Technologies (in millions, except for stock price) : -Use the information above to answer the following question.What is the EPS for the company's stock for the current year?

If a corporation declares and distributes a stock dividend on its common shares:

Features of common stock usually include all of the following except:

A major advantage of the corporate form of ownership is:

Dividends in arrears are reported as current liabilities on the balance sheet.

Which of the following is not a reason a company would repurchase stock?

The right of current stockholders to purchase additional shares of newly issued stock in order to maintain the same percentage ownership is called:

A company has the following paid-in capital: -Use the information above to answer the following question.If the company pays a $35,000 dividend,and the preferred stock is cumulative and two years' dividends are in arrears,what is the amount the common stockholders will receive?

The Wadsworth Corp.has common stock with a par value of $5.During the current year,it declared and paid dividends of $10,000.It sold at $20 per share an additional 1,000 shares of stock that had not been previously issued.In addition,it had net income of $50,000 for the year.What is the amount of change to its stockholders' equity for the year?

The statement of stockholder's equity differs from the statement of retained earnings in that the statement of stockholders' equity:

A company reported net income of $6 million.During the year the average number of common shares outstanding was 3 million.The price of a share of common stock at the end of the year was $5.There were 400,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative. -Use the information above to answer the following question.The EPS is approximately:

Unpaid dividends on cumulative preferred stock are called dividends in arrears.

On the payment date for a cash dividend,the company:

When a company reissues (or sells)shares of its treasury stock at an amount different than its cost,it reports a gain or a loss on the sale.

A company has the following paid-in capital: -Use the information above to answer the following question.If the company pays a $100,000 dividend,and the preferred stock is cumulative and three years' dividends are in arrears,what is the amount the preferred stockholders will receive?

Which of the following line items are not found on a sole proprietorship's statement of owner's equity?

If shares of common stock are issued at a market price greater than par value,the amount in excess of par should be credited to: