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Exam 18: Shareholders Equity Key

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Question 81

Multiple Choice

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Share issue costs refer to the costs of obtaining the legal, promotional, and accounting services necessary to effect the sale of shares. The costs reduce the net cash proceeds from selling the shares and thus paid-in capital-excess of par, and are:

A) Not recorded separately.
B) Recorded as an asset.
C) Recorded as a liability.
D) Amortized over time.

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Question 82

Multiple Choice

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The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2013 after paying $20,000 cash dividends in each of 2012 and 2011. What is the amount of dividends common shareholders will receive in 2013?

A) $18,000.
B) $26,000.
C) $28,000.
D) $32,000.

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Question 83

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Boxer Company owned 20,000 shares of King Company that were purchased in 2011 for $500,000. On May 1, 2013, Boxer declared a property dividend of 1 share of King for every 10 shares of Boxer stock. On that date, there were 50,000 shares of Boxer stock outstanding. The market value of the King stock was $30 per share on the date of declaration and $32 per share on the date of distribution. By how much is retained earnings reduced by the property dividend?

The 2014 sale of half of the treasury stock would:

Share issue costs refer to the costs of obtaining the legal, promotional, and accounting services necessary to effect the sale of shares. The costs reduce the net cash proceeds from selling the shares and thus paid-in capital-excess of par, and are:

When treasury stock is purchased for an amount greater than its par value, what is the effect on total shareholders' equity?

When dividends are declared in one fiscal year and paid in the next fiscal year, the liability for the dividend should be recorded as of the:

Poodle Corporation was organized on January 3, 2013. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2013, Poodle 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 2013?

When a property dividend is declared, the reduction in retained earnings is for:

Coy, Inc., initially issued 200,000 shares of $1 par value stock for $1,000,000 in 2011. In 2012, the company repurchased 20,000 shares for $200,000. In 2013, 10,000 of the repurchased shares were resold for $160,000. In its balance sheet dated December 31, 2013, Coy, Inc.'s treasury stock account shows a balance of:

Authorized common stock refers to the total number of shares:

A new CEO was hired to revive the floundering Heirloom Watch Corporation. The company had endured operating losses for several years, but confidence was emerging that better times were ahead. The board of directors and shareholders approved a quasi-reorganization for the corporation. The reorganization included devaluing inventory for obsolescence by $210 million and increasing land by $10 million. Immediately before the restatement, at December 31, 2013, Heirloom Watch Corporation's balance sheet appeared as follows (in condensed form): Required: 1. Prepare the journal entries appropriate to record the quasi-reorganization on January 1, 2014. 2. Prepare a balance sheet as it would appear immediately after the restatement.

What would shareholders' equity be as of December 31, 2014?

Treasury stock transactions never increase retained earnings or net income.

What was the average cost per share of the treasury stock purchased by Composition during 2012 and 2013, respectively?

On October 15, 2013, a 5% stock dividend was declared and distributed. The market value of the common stock on this date was $32 per share. Fractional share rights represented 100,000 shares. Cash was paid in lieu of issuing fractional share rights. On the date of declaration and payment, the company had 10 million shares of common stock outstanding. The par value of the common shares was $5. Required: Prepare any necessary journal entries to record the above events.

Preferred stock is called preferred because it usually has two preferences. These preferences relate to:

What would shareholders' equity be as of December 31, 2014?

When treasury shares are sold at a price above cost:

What was the average exercise price per share of stock issued under option plans in 2013?