Question 1

Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between these two classes of stock?

Accepted Answer

The answer of Companies frequently issue both preferred stock and...

Question 2

The _______________ is the chief executive officer with direct responsibility for managing the business.

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The answer of The _______________ is the chief executive officer...

Question 3

A debit balance in retained earnings is identified as a ________________.

Accepted Answer

The answer of A debit balance in retained earnings is...

Question 4

The entry to record the declaration of a stock dividend increases _________________, and decreases ________________.

Accepted Answer

The answer of The entry to record the declaration of...

Question 5

The _______________ feature of preferred stock gives the preferred stockholders the right to receive current-year dividends and unpaid prior-year dividends before common stockholders receive any dividends.

Accepted Answer

The answer of The _______________ feature of preferred stock gives...

Question 6

Most publicly held corporations are required to make extensive disclosure of their financial affairs to the _______________.

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The answer of Most publicly held corporations are required to...

Question 7

The paid-in capital section of the balance sheet consists of two classifications: ______________________ and ______________________.

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The answer of The paid-in capital section of the balance...

Question 8

A corporation's own stock that has been reacquired by the corporation and held for future use is called __________________ and is deducted from total _____________________ on the balance sheet.

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The answer of A corporation's own stock that has been...

Question 9

Par value of stock represents the __________________ per share that must be retained in the business for the protection of corporate ___________________.

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The answer of Par value of stock represents the __________________...

Question 10

Stockholders generally have the right to share in corporate _______________ and in ______________ upon liquidation.

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The answer of Stockholders generally have the right to share...

Question 11

Both a stock split and a stock dividend will _________________ the number of shares outstanding and have _________________ on total stockholders' equity.

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The answer of Both a stock split and a stock...

Question 12

Mann Corporation decided to issue common stock and used the $120,000 proceeds to retire all of its outstanding bonds on January 1, 2014. The following information is available for the company for 2013 and 2014. $\begin{array}{lrr}&2014&\$ 1013\
\text { Net income } & 20,000 & \$ 100,000 \
\text { Average stockholders' equity } & 1,000,000 & 800,000 \
\text { Total assets } & 1,200,000 & 1,200,000 \
\text { Current liabilities } & 100,000 & 100,000 \
\text { Total liabilities } & 360,000 & 480,000
\end{array}$ Instructions
(a) Compute the return on common stockholders' equity for both years.
(b) Explain how it is possible that net income increased, but the return on common stockholders' equity decreased.
(c) Compute the debt to assets ratio for both years, and comment on the implications of this change in the company's solvency.

Accepted Answer

The answer of Mann Corporation decided to issue common stock...

Question 13

A corporation has a separate __________________________ distinct from its owners.

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The answer of A corporation has a separate __________________________ distinct...

Question 14

Three important dates associated with dividends are the: (1)___________________, (2)__________________, and (3)__________________.

Accepted Answer

The answer of Three important dates associated with dividends are...

Question 15

Define par value, and discuss its significance in accounting.

Accepted Answer

The answer of Define par value, and discuss its significance...

Question 16

Manning Company has $1,000,000 in assets and $1,000,000 in stockholders' equity, with 50,000 shares outstanding the entire year. It has a return on assets ratio of 9%. In the past year it had net income of $75,000. On January 1, 2014, it issued $300,000 in debt at 5% and immediately repurchased 25,000 shares for $300,000. Management expected that, had it not issued the debt, it would have again had net income of $75,000.
Instructions
(a) Determine the Company's net income and earnings per share for 2013 and 2014. (Ignore taxes in your computations.)
(b) Compute the Company's return on common stockholders' equity for 2013 and 2014.
(c) Compute the company's debt to assets ratio for 2013 and 2014.

Accepted Answer

The answer of Manning Company has $1,000,000 in assets and...

Question 17

The major advantages of the corporate form of organization include (1) limited _________________ of stockholders, (2) continuous ____________________ and (3) ease of transferring ___________________.

Accepted Answer

The answer of The major advantages of the corporate form...

Question 18

The following stockholders' equity accounts, arranged alphabetically, are in the ledger of Marvel Corporation at December 31, 2014. $\begin{array}{lr}
\text { Common Stock ( } \$ 5 \text { stated value) } & \$ 2,800,000 \
\text { Paid-in Capital in Excess of Par Value-Preferred Stock } & 45,000 \
\text { Paid-in Capital in Excess of Stated Value-Common Stock } & 1,050,000 \
\text { Preferred Stock ( } 8 \%, \$ 100 \text { par, noncumulative) } & 1,000,000 \
\text { Retained Earnings } & 1,684,000 \
\text { Treasury Stock }(10,000 \text { shares) } & 98,000
\end{array}$ 
Instructions
Prepare the stockholders' equity section of the balance sheet at December 31, 2014.

Accepted Answer

The answer of The following stockholders' equity accounts, arranged alphabetically,...

Question 19

On January 1, 2014, Holt Corporation had $1,000,000 of common stock outstanding that was issued at par and retained earnings of $750,000. The company issued 60,000 shares of common stock at par on July 1 and earned net income of $400,000 for the year.
Instructions
Journalize the declaration of a 15% stock dividend on December 10, 2014, for the following two independent assumptions.
(a) Par value is $10 and market value is $16.
(b) Par value is $5 and market value is $8.

Accepted Answer

The answer of On January 1, 2014, Holt Corporation had...

Question 20

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

Accepted Answer

The answer of For what reasons might a company like...

Quiz 11: Reporting and Analyzing Stockholders Equity

Companies frequently issue both preferred stock and common stock. What are the major differences in the rights of stockholders between these two classes of stock?

The _______________ is the chief executive officer with direct responsibility for managing the business.

A debit balance in retained earnings is identified as a ________________.

The entry to record the declaration of a stock dividend increases _, and decreases .

The _______________ feature of preferred stock gives the preferred stockholders the right to receive current-year dividends and unpaid prior-year dividends before common stockholders receive any dividends.

Most publicly held corporations are required to make extensive disclosure of their financial affairs to the _______________.

The paid-in capital section of the balance sheet consists of two classifications: and .

A corporation's own stock that has been reacquired by the corporation and held for future use is called and is deducted from total ___ on the balance sheet.

Par value of stock represents the per share that must be retained in the business for the protection of corporate _.

Stockholders generally have the right to share in corporate _ and in upon liquidation.

Both a stock split and a stock dividend will _ the number of shares outstanding and have _ on total stockholders' equity.

A corporation has a separate __________________________ distinct from its owners.

Three important dates associated with dividends are the: (1)_, (2), and (3)__.

Define par value, and discuss its significance in accounting.

The major advantages of the corporate form of organization include (1) limited _ of stockholders, (2) continuous and (3) ease of transferring ___.

For what reasons might a company like IBM repurchase some of its stock (treasury stock)?