ACCT 2001 Chapter : Ch 11 Study Guide Filled In

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15 Mar 2019

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Chapter 11: reporting and analyzing stockholders" equity (note: this worksheet is intended as an optional study guide. Lo 1: the corporate form of organization: A company organized as a separate legal entity, with most of the rights and privileges of a person. A corporation that may have thousands of stockholders and whose stock is traded on a national securities market. A corporation that has only a few stockholders and whose stock is not available for sale to the general public. It is relatively easy for a corporation to obtain capital through the. _securities and exchange commission_ (sec) through quarterly and annual reports: additional _taxes, corporations must pay federal and state taxes as a separate legal entity. In addition, stockholders are required to pay taxes on cash dividends: thus, many argue that corporate income is taxed _twice_ (double taxation) once at the corporate level and again at the individual level.

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Common Stock Issuance, Treasury Stock, Preferred Stock,Dividends, Comprehensive Income, Disclosure. Castleline,Inc. reported the following shareholdersâ equity section as of thebeginning of the current year:

Stockholder's Equity

Contributed Capital:
Common Stock, $1 Par Value, 3,850,000 shares authorized,905,000 shares issued, and 821,500 shares outstanding	$905,000
Additional Paid-in Capital in Excess of Par-Common	22,625,000
Total Contributed Capital:	$23,530,000
Retained Earnings:	$8,957,450
Accumulated Other Comprehensive Income	1,057,600
Less: Treasury Stock (83,500 common stock shares at cost)	(1,670,000)
Total Stockholders Equity:	$31,875,050

During the current year, Castleline engaged in the followingtransactions affecting the stockholdersâ equity section of itscurrent balance sheet.

Issued 400,000 shares of its $1 par value common stock at $31per share. The underwriter charged a 3% fee for issuing the shares.The stock issue costs are not capitalized.

Issued 500,000 shares of $10 par value 6% preferred stock(2,550,000 authorized) at $40 per share. These shares wereprivately placed and Castleline did not pay stock issue costs.

Purchased 220,000 shares of common stock at $32 per share.

Declared a $450,000 dividend for the first half of the year.(The declarations should be recorded separately for the common andthe preferred shares.)

Sold 105,000 of the treasury shares at $44 per share. (The83,500 treasury shares on hand at the beginning of the year areconsidered sold first. The company paid $20 per share for theseshares of treasury stock).

Paid the cash dividends.

Reported net income of $3,180,500 for the current year.

In addition to the net income, Castleline incurred an $801,000unrealized loss on an available-for-sale investment.

Declared a $450,000 cash dividend for the second half of theyear. (The declarations should be recorded separately for thecommon and the preferred shares.)

Closed out all dividends and other comprehensive incomeaccounts.

Required Â»

Prepare all journal entries required to record the transactionslisted above.

raspberryreindeer434

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

1. 11-4 Reporting the Stockholders' Equity Section of the BalanceSheet [LO2, LO3, LO4]

Shelby Corporation was organized in January 2010 by 10 stockholdersto operate an air conditioning sales and service business. Thecharter issued by the state authorized the following capitalstock:

Common stock, $1 par value, 200,000 shares.

Preferred stock, $8 par value, 6 percent, 50,000 shares.

During January and February 2010, the following stock transactionswere completed:

a.	Collected $40,000 cash from each of the 10 organizers and issued2,000 shares of common stock to each of them.
b.	Issued 15,000 shares of preferred stock at $25 per share; collectedin cash.

Net income for 2010 was $40,000; cash dividends declared and paidat year-end were $10,000.

Required:

Prepare the stockholders' equity section of the balance sheet atDecember 31, 2010. (Omit the "$" sign in your response.)

Stockholders' Equity%u2014December 31, 2010
Contributed capital:
Preferred stock	$
Additional paid-incapital, preferred stock
Common stock
Additional paid-incapital, common stock

Totalcontributed capital
Retained earnings

Total stockholders'equity	$

E11-1Computing Shares Outstanding [LO1]

The 2008 annual report for Fortune Brands, the seller of Pinnaclegolf balls and MasterLock padlocks,disclosed that 750 millionshares of common stock have been authorized. At the end of 2007,235 million shares had been issued and the number of shares intreasury stock was 81 million. During 2008, 1 million common shareswere reissued from treasury, and 5 million common shares werepurchased for treasury stock.

Required:

(a)	Determine the number of common shares issued at the end of 2008.(Enter your answer in millions.)

Issued stock

(b)	Determine the number of common shares in treasury at the end of2008. (Enter your answer in millions.)

Treasury stock

(c)	Determine the number of common shares outstanding at the end of2008. (Enter your answer in millions.)

Shares outstanding

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ACCT 2001 Chapter : Ch 11 Study Guide Filled In

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