ACC 151 Lecture Notes - Lecture 19: Retained Earnings, Net Income, Dividend

47 views4 pages

cerisegiraffe538

20 Nov 2015

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Acc 151 lecture 19 shareholder"s equity. Organizing and managing a corporation: stockholders have ultimate control, board of directors is selected by a vote of the stockholders, stockholders usually meet once a year, overall responsibility for managing the company. Credit balance lifetime earnings > lifetime losses and dividends. Debit balance lifetime earnings < lifetime losses and dividends. Stated as a percent of par value or a dollar amount per share. Passed dividends are owed to preferred shareholders. Increase stock account and decrease retained earnings. 25% or less, recorded at market value. Greater than 25%, recorded at par value. Increase in shares with a proportionate reduction in par value. Market price multiplied by number of shares outstanding. Overall market assessment of the worth of a share of common stock is reflected in the price-earnings ratio. Redeemable preferred stock requires company to redeem stock at a set price.

Related Questions

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

Biscayne Bay Water Inc. bottles and distributes spring water. OnMay 14 of the current year, Biscayne Bay Water Inc. reacquired26,550 shares of its common stock

The stock outstanding when a corporation has issued only oneclass of stock.

at $67 per share. On September 6, Biscayne Bay Water Inc. sold12,750 of the reacquired shares at $73 per share. The remaining13,800 shares were sold at $64 per share on November 30.

Required:

Journalize the transactions of May 14, September 6, andNovember 30. Refer to the Chart of Accounts for exact wording ofaccount titles.

What is the balance in Paid-In Capital

Capital contributed to a corporation by the stockholders andothers.

from Sale of Treasury Stock on December 31 of the currentyear?

Where will the balance in Paid-In Capital from Sale of TreasuryStock be reported on the balance sheet?

For what reasons might Biscayne Bay Water Inc. have purchasedthe treasury stock?

CHART OF ACCOUNTS

Biscayne Bay Water Inc.

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
193	Equipment
194	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
226	Interest Payable
231	Cash Dividends Payable
236	Stock Dividends Distributable
241	Salaries Payable
261	Mortgage Note Payable

Paid-In Capital in Excess of Par-Common Stock

Paid-In Capital in Excess of Par-Preferred Stock

331

Paid-In Capital from Sale of Treasury Stock

A. Journalize the transactions of May 14, September 6, andNovember 30. Refer to the Chart of Accounts for exact wording ofaccount titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8

Solution

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8

Final Questions

B. What is the balance in Paid-In Capital

Capital contributed to a corporation by the stockholders andothers.

from Sale of Treasury Stock on December 31 of the currentyear?selector 1

Credit

Debit

C. Where will the balance in Paid-In Capital from Sale ofTreasury Stock be reported on the balance sheet?

selector 1

Liabilities section

Stockholder's Equity section

Assets section

Not reported on the balance sheet

D. For what reasons might Biscayne Bay Water Inc. have purchasedthe treasury stock? Check all that apply.

To support the market price of the stock.

The company wishes to increase the par value of its stock.

For reissuance to employees as a bonus according to stockpurchase agreements.

The company wishes to receive more of its own dividends.

To provide shares for resale to employees.

peachsheep145

Mystic Lake Inc. bottles and distributes spring water. On July 9of the current year, Mystic Lake reacquired 39,500 shares of itscommon stock

The stock outstanding when a corporation has issued only oneclass of stock.

at $42 per share. On September 22, Mystic Lake Inc. sold 30,100of the reacquired shares at $51 per share. The remaining 9,400shares were sold at $41 per share on November 23.

Required:

Journalize the transactions of July 9, September 22, andNovember 23. Refer to the Chart of Accounts for exact wording ofaccount titles.

What is the balance in Paid-In Capital

Capital contributed to a corporation by the stockholders andothers.

from Sale of Treasury Stock on December 31 of the currentyear?

For what reasons might Mystic Lake have purchased the treasurystock?

CHART OF ACCOUNTS

Mystic Lake Inc.

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
193	Equipment
194	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
226	Interest Payable
231	Cash Dividends Payable
236	Stock Dividends Distributable
241	Salaries Payable
261	Mortgage Note Payable

Paid-In Capital in Excess of Par-Common Stock

Paid-In Capital in Excess of Par-Preferred Stock

331

Paid-In Capital from Sale of Treasury Stock

A. Journalize the transactions of July 9, September 22, andNovember 23. Refer to the Chart of Accounts for exact wording ofaccount titles.

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
B. What is the balance in Paid-In Capital Capital contributed to a corporation by the stockholders andothers. from Sale of Treasury Stock on December 31 of the currentyear?selector 1 Debit Credit Points: Feedback Check My Work Explanation C. For what reasons might Mystic Lake have purchased thetreasury stock? Check all that apply. For reissuance to employees as a bonus according to stockpurchase agreements. The company wishes to receive more of its own dividends. To provide shares for resale to employees. The company wishes to increase the par value of its stock. To support the market price of the stock.

limehyena147

ACC 151 Lecture Notes - Lecture 19: Retained Earnings, Net Income, Dividend

Document Summary

Get access

Related Documents

AFM101 Lecture Notes - Lecture 21: Retained Earnings, Preferred Stock, Stock Split

ACC 231 Lecture Notes - Lecture 23: Net Income, Treasury Stock, Cash Flow

ACC 212 Chapter Notes - Chapter 11: Online Copyright Infringement Liability Limitation Act, Treasury Stock, Financial Statement

Related Questions