ACC* - Accounting ACC* M115 Lecture Notes - Lecture 6: Stock Transfer Agent, Preferred Stock, Common Stock

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redminnow421

6 Jun 2020

School

CCC

Department

ACC* - Accounting

Course

ACC* - Accounting ACC* M115

Professor

Murphy

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Document Summary

Common stock default class; all common stock shares have equal rights; smaller chance of receiving dividends than ps owners. Preferred stock preference (first rights) to dividends; dividend rights stated as $ per share or percentage of par. Preferred stock, par or preferred 8% stock, par. Cumulative preferred stock right to receive regular dividends that were not declared in prior years. In arrears cumulative stock that hasn"t been paid in prior years; must be paid before common stock divs are paid. Order of who receives assets in a liquidation: creditors, preferred stockholders, common stockholders. Often issued at a price that is not par. Issued at price more than par issued at premium. Issued at price less than par discount (rarely done) Price depends on: financial condition / earnings + div record of corp, investor expectations of the corp"s potential earning power, general business / econ conditions + expectations.

Related Questions

Raphael Corporationâs common stock is currently selling on astock exchange at $154 per share, and its current balance sheetshows the following stockholdersâ equity section: Preferredstockâ5% cumulative, $___ par value, 1,000 shares authorized,issued, and outstanding $ 50,000

Common stockâ$___ par value, 4,000 shares authorized, issued,and outstanding 80,000

Retained earnings 300,000

Total stockholders' equity $ 430,000

What is the current market value (price) of this corporationâscommon stock?

What are the par values of the corporation's preferred stock andits common stock?

If no dividends are in arrears, what are the book values pershare of the preferred stock and the common stock?

If two years' preferred dividends are in arrears, what are thebook values per share of the preferred stock and the commonstock?

If two yearsâ preferred dividends are in arrears and thepreferred stock is callable at $60 per share, what are the bookvalues per share of the preferred stock and the common stock?

If two yearsâ preferred dividends are in arrears and the boardof directors declares cash dividends of $19,500, what total amountwill be paid to the preferred and to the common shareholders?

whitesheep675

[The following information applies to the questionsdisplayed below.]

Raphael Corporationâs common stock is currently selling on astock exchange at $191 per share, and its current balance sheetshows the following stockholdersâ equity section:


Preferred stockâ5% cumulative, $___ par value, 1,000shares authorized, issued, and outstanding	$	55,000
Common stockâ$___ par value, 4,000 shares authorized,issued, and outstanding		140,000
Retained earnings		370,000

Total stockholders' equity	$	565,000

1. What is the current market value (price) ofthis corporationâs common stock?

Market price

per share

2. What are the par values of the corporation'spreferred stock and its common stock?

	Par Value
Corporation's preferred stock
Corporation's common stock

3. If no dividends are in arrears, what are thebook values per share of the preferred stock and the commonstock?

Book Value Per PreferredShare
ChooseNumerator:	/	ChooseDenominator:	=	Book Value PerPreferred Share
	/		=	Book value perpreferred share
	/		=

Book Value Per CommonShare
ChooseNumerator:	/	ChooseDenominator:	=	Book Value PerCommon Share
	/		=	Book value percommon share
	/		=

4. If two years' preferred dividends are inarrears, what are the book values per share of the preferred stockand the common stock?

Book Value PerPreferred Share
ChooseNumerator:	/	ChooseDenominator:	=	Book Value PerPreferred Share
	/		=	Book value perpreferred share
	/		=
Book Value PerCommon Share
ChooseNumerator:	/	ChooseDenominator:	=	Book Value PerCommon Share
	/		=	Book value percommon share
	/		=

5. If two yearsâ preferred dividends are inarrears and the preferred stock is callable at $65 per share, whatare the book values per share of the preferred stock and the commonstock?

Book Value PerPreferred Share
ChooseNumerator:	/	ChooseDenominator:	=	Book Value PerPreferred Share
	/		=	Book value perpreferred share
	/		=
Book Value PerCommon Share
ChooseNumerator:	/	ChooseDenominator:	=	Book Value PerCommon Share
	/		=	Book value percommon share
	/		=

6.1 If two yearsâ preferred dividends are inarrears and the board of directors declares cash dividends of$17,900, what total amount will be paid to the preferred and to thecommon shareholders?


Total amount paidto the preferred shareholders
Total amount paidto the common shareholders

6.2

What is the amount of dividends per share for the common stock?(Round your answer to two decimal places.)

Dividend pershare

scarletwombat547

1. The effect of a stock dividend is to

Question 17 options:

change the composition of stockholders' equity.

increase the book value per share of common stock.

decrease total assets and stockholders' equity.

decrease total assets and total liabilities

2. Regular dividends are declared out of:

	Common Stock.
	Treasury Stock.
	Retained Earnings.
	Paid-in Capital in Excess of Par.

3. Solaris, Inc. has 2,000 shares of 5%, $10 par value,cumulative preferred stock and 50,000 shares of $1 par value commonstock outstanding at December 31, 2014. What is the annual dividendon the preferred stock?

Question 20 options:

$5 per share

$10,000 in total

$1,000 in total

$.05 per share

4. Corporations generally issue stock dividends in order to

Question 21 options:

decrease the amount of capital in the corporation.

increase the market price per share.

exceed stockholders' dividend expectations.

increase the marketability of the stock.

5. A stockholder who receives a stock dividend would

Question 22 options:

expect the par value of the stock to change.

own more shares of stock.

expect retained earnings to increase.

expect the market price per share to increase.

6. When stock dividends are distributed,

Question 23 options:

	Retained Earnings is decreased.
	Common Stock Dividends Distributable is decreased.
	no entry is necessary if it is a large stock dividend.
	Paid-in Capital in Excess of Par is debited if it is a smallstock dividend.

Identify the effect the declaration and distribution of a stockdividend has on the par value per share.

Question 24 options:

No effect

Increase or decrease

Increase

Decrease

A stock split

Question 25 options:

will have no effect on the par value per share of stock.

will increase the total par value of the stock.

will increase total paid-in capital.

may occur in the absence of retained earnings.

On January 1, Sly Corporation had 120,000 shares of $10 parvalue common stock outstanding. On March 17, the company declared a15% stock dividend to stockholders of record on March 20. Marketvalue of the stock was $13 on March 17. The entry to record thetransaction of March 17 would include a

Question 26 options:

debit to Common Stock Dividends Distributable for $180,000.

credit to Cash for $234,000.

credit to Stock Dividends for $54,000.

credit to Common Stock Dividends Distributable for $180,000.

Bento, Inc. had 500,000 shares of common stock outstandingbefore a stock split occurred, and 1,500,000 shares outstandingafter the stock split. The stock split was

Question 27 options:

1-for-5.

2-for-5.

5-for-1.

3-for-1.

In the stockholders' equity section of the balance sheet,

Question 28 options:

Dividends in arrears will appear as a restriction of RetainedEarnings.

Common Stock Dividends Distributable will appear in its ownsubsection of the stock- holders' equity.

Common Stock Dividends Distributable will be classified as partof additional paid-in capital.

Additional Paid-in Capital appears under the subsection Paid-inCapital.

During 2014 Miami Inc. had sales revenue $1,328,000, grossprofit $728,000, operating expenses $398,000, cash dividends$90,000, other expenses and losses $40,000. Its corporate tax rateis 30%. What was Miami's income tax expense for the year?

Question 29 options:

$87,000

$398,400

$180,000

$60,000

Paiva Corporation splits its common stock 2 for 1, when themarket value is $80 per share. Prior to the split, Paiva had100,000 shares of $10 par value common stock issued andoutstanding. After the split, the par value of the stock

Question 30 options:

	remains the same.
	is reduced to $5 per share.
	is reduced to $2 per share.
	is reduced to $20 per share.

periwinklejellyfish203

ACC* - Accounting ACC* M115 Lecture Notes - Lecture 6: Stock Transfer Agent, Preferred Stock, Common Stock

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