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Exam 10: Stockholders Equity

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Question 41

True/False

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Total assets,total liabilities,and total stockholders' equity do not change as a result of a stock dividend.

A) True
B) False

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Question 42

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The declaration and issuance of a stock dividend:

A) Does not change total assets,liabilities,or total stockholders' equity.
B) Decreases total stockholders' equity and increases common stock.
C) Decreases assets and decreases total stockholders' equity.
D) Does not change retained earnings or paid-in capital.

E) None of the above
F) B) and C)

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Question 43

Multiple Choice

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The correct order from the smallest number of shares to the largest number of shares is:

Which of the following financing alternatives has the highest preference of payment in a case where the company liquidates its assets?

Treasury Stock is normally reported as:

Cumulative preferred stock means that dividends accumulate interest during the year.

Oregon Outfitters issues 1,000 shares of $1 par value common stock at $20 per share.Later in the year,the company decides to repurchase 200 shares at a cost of $22 per share.(1)Record the original issue of the 1,000 shares,(2)Record the repurchase of 200 shares,and (3)Record the entry if Oregon Outfitters reissues the 200 shares of treasury stock at $25 per share.

On May 15 Canadian Falcon declares a quarterly cash dividend of $0.15 per share payable on June 10 to all stockholders of record on May 31.Record Canadian Falcon's declaration and payment of cash dividends for its 200,000 shares of common stock.

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

If a company purchases shares of another company,it records this transaction as treasury stock.

Retained Earnings is the amount stockholders have invested in the company.

Prom Night Formal Wear has the following stockholders' equity accounts at December 31,2012: Common Stock,$1 par value,2,000,000 shares; Additional Paid-in Capital,$22 million; Retained Earnings,$15 million; and Treasury Stock,50,000 shares,$1.25 million.Prepare the stockholders' equity section of the balance sheet.

Stock repurchases reduce the number of shares outstanding,thereby increasing earnings per share.

A feature common to both stock splits and stock dividends is

Panhandle Corporation was organized on January 3,2012.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2012,Panhandle had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. What is total paid-in capital at the end of 2012?

Angel investors are investors that focus on companies at or near bankruptcy.

We can estimate the average purchase cost of treasury stock per share by dividing the treasury stock balance by the number of shares repurchased.

On March 31,the board of directors of Shoeboxes,Inc.declares a 100% stock dividend on its 100,000,$0.01 par,common shares.The market price of Shoeboxes common stock is $30 on March 31.Record the stock dividend.

Explain the difference between authorized,issued,and outstanding shares.

The corporation's own stock that has been issued and then repurchased by the company is referred to as: