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Exam 11: Reporting and Analyzing Equity

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Question 51

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A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

A) A debit to Common Stock for $12,000.
B) A debit to Land for $12,000.
C) A credit to Land for $12,000.
D) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000.
E) A credit to Common Stock for $84,000.

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Question 52

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Dynasty Corporation had stockholders' equity on January 1 as follows: Common Stock, $5 par value, 1,000,000 shares authorized, 400,000 shares issued; Paid-in Capital in Excess of Par Value, Common Stock, $800,000; Retained Earnings, $3,600,000. Prepare journal entries to record the following transactions:

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Question 53

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Recording of a stock dividend results in a liability being recorded.

Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

The price-earnings ratio is calculated by dividing:

A company is authorized to issue 750,000 shares of $2 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:

Shareholders in a corporation have the power to bind the corporation to contracts.

A company has 500 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $60 per share. It also has 20,000 shares of common stock outstanding, and the total value of its stockholders' equity is $680,000. The company's book value per common share equals:

A company reported $1,050,000 in net income for the current year. Earnings per common share is $1.75 and the year-end market price of the shares is $31.50. Calculate the company's price earnings ratio.

Djarleen Company has 10,000 shares of $10 par preferred stock. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is:

A corporation is a legal entity separate from its owners.

A company paid $0.48 in cash dividends per share. Its earnings per share is $3.20 and its market price per share is $20.00. Its dividend yield equals:

Robin Company had net income of $67,000. The company had 9,000 weighted average common shares outstanding. The basic earnings per share equal $7.44 per share.

If a company resells treasury stock below the acquisition cost, a loss from the sale of treasury stock is recorded.

On September 20, Fletcher Corporation issued 25,000 shares of no-par common stock for equipment having a market value of $85,000. Prepare the general journal entry to record this transaction.

A company had a beginning balance in retained earnings of $430,000. It had net income of $60,000 and paid out cash dividends of $56,250 in the current period. The ending balance in retained earnings equals:

Callable preferred stock gives a corporation the option of exchanging preferred shares into common shares at a specified rate.

Torino Company has 10,000 shares of $5 par value, 4% cumulative and nonparticipating preferred stock and 100,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

A stock dividend is recorded with a transfer from:

Changes in accounting estimates are: