Question 1

Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array} { c c r } 
& \text { Dividend Declared } \
\text { year 1 } & \$ 2,000 \
\text { year 2 } & \$ 6,000 \
\text { year 3 } & \$ 32,000
\end{array}$$

The amount of dividends paid to preferred and common shareholders in year 3 is:

Accepted Answer

The preferred stock dividends are cumulative, meaning any unpaid dividends from previous years must be paid before common shareholders receive dividends. The annual preferred dividend is 5% of the $100 par value, which is $5 per share. With 1,000 shares, the total annual preferred dividend is $5,000. Over three years, this totals $15,000. In year 1, $2,000 was paid (all to preferred, leaving $3,000 unpaid). In year 2, $6,000 was paid (covering the $3,000 unpaid from year 1 and the current year's $5,000, leaving $2,000 unpaid). In year 3, the first $7,000 ($2,000 unpaid from year 2 and $5,000 for year 3) must go to preferred shareholders, leaving $25,000 ($32,000 - $7,000) for common shareholders.

Question 2

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

Accepted Answer

$0.55 * (190,000 shares - 8,000 shares) = $100,100

Question 3

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the journal entry necessary to record the reissuance of treasury stock on July 20?

Accepted Answer

When reissuing treasury stock above its repurchase price, the entry includes debiting Cash for the proceeds received, crediting Treasury Stock for its cost, and crediting any excess to Paid-in Capital, Treasury Stock.

Question 4

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

Accepted Answer

The company issued 5,000 shares of no par common stock with a stated value of $1 per share at $10 per share. Therefore, the total par value of the shares is $5,000 (5,000 x $1). The excess of the issue price over the par value ($10 - $1 = $9 per share) is called the paid-in capital in excess of stated value, common stock. The journal entry to record the issuance of the shares is:
Debit Cash $50,000
Credit Common Stock $5,000
Credit Paid-in Capital in Excess of Stated Value, Common Stock $45,000 (5,000 x $9)

Question 5

Prior to May 1,Fortune Company has never had any treasury stock transactions.A company repurchased 100 shares of its common stock on May 1 for $5,000.On July 1,it reissued 50 of these shares at $52 per share.On August 1,it reissued the remaining treasury shares at $49 per share.What is the balance in the Paid-in Capital,Treasury Stock account on August 2?

Accepted Answer

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Question 6

All of the following regarding accounting for Treasury Stock under U.S.GAAP and IFRS is true except:

Accepted Answer

Under IFRS, both gains and losses are recognized on retirements of treasury stock.

Question 7

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Accepted Answer

$0.55 * (190,000 shares - 8,000 shares) = $100,100

Question 8

Halverstein Company's outstanding stock consists of 7,000 shares of cumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array}{l}
&\text { Dividend Declared }\ 
\text { Year } 1 & \$  0 \
\text { Year } 2 & \$  6,000 \
\text { Year } 3 & \$  32,000
\end{array}$$
The amount of dividends paid to preferred and common shareholders in Year 2 is:

Accepted Answer

In Year 2, the preferred shareholders are entitled to their cumulative dividends for both Year 1 and Year 2 before any dividends can be paid to common shareholders. The annual preferred dividend is 7,000 shares * $10 par value * 5% = $3,500. For two years, this totals $7,000. Since only $6,000 was declared, all of it goes to the preferred shareholders, leaving nothing for the common shareholders.

Question 9

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the journal entry necessary to record the repurchase of stock on June 30?

Accepted Answer

The answer of Prior to June 30,a company has never...

Question 10

Fargo Company's outstanding stock consists of 400 shares of noncumulative 5% preferred stock with a $10 par value and 3,000 shares of common stock with a $1 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array} { c c r } 
& \text { Dividend Declared } \
\text { year 1 } & \$ 20,000 \
\text { year 2 } & \$ 6,000 \
\text { year 3 } & \$ 32,000
\end{array}$$
The amount of dividends paid to preferred and common shareholders in year 1 is:

Accepted Answer

The preferred stock is entitled to a 5% dividend, which is $0.50 per share. In year 1, the company declared a total of $20,000 in dividends. Of this amount, $200 (400 shares x $0.50) was paid to the preferred shareholders. The remaining $19,800 ($20,000 - $200) was paid to the common shareholders.

Question 11

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share.The entry to record this transaction would be:

Accepted Answer

When a corporation issues common stock, the journal entry includes a debit to Cash and a credit to Common Stock for the par value of the shares issued. Since this corporation issued no par common stock, there is no par value to record. Therefore, the entry is simply a debit to Cash and a credit to Common Stock for the total amount received, which is $27,500 (2,500 shares x $11 per share). Choice A is incorrect because it includes a credit to Paid-in Capital in Excess of Par Value, which is not applicable in this scenario. Choice C is incorrect because it records the transaction in reverse order. Choices D and E are incorrect because they involve treasury stock transactions, which are not applicable in this scenario.

Question 12

What are the rights generally granted to common stockholders?

Accepted Answer

The answer of What are the rights generally granted to...

Question 13

Prior to June 30,a company has never had any treasury stock transactions.A company repurchased 100 shares of its common stock on June 30 for $40 per share.On July 20,it reissued 50 of these shares at $46 per share.On August 1,it reissued 20 of the shares at $38 per share.What is the balance in the Treasury Stock account on August 2?

Accepted Answer

Treasury Stock = # of shares held * initial cost per share
(100 - 50 - 20) * $40 = $1,200

Question 14

Sweet Company's outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array} { c c r } 
& \text { Dividend Declared } \
\text { year 1 } & \$ 2,000 \
\text { year 2 } & \$ 6,000 \
\text { year 3 } & \$ 32,000
\end{array}$$

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Accepted Answer

The answer of Sweet Company's outstanding stock consists of 1,000...

Question 15

What is a corporation? Identify the key advantages and disadvantages of corporations.

Accepted Answer

The answer of What is a corporation? Identify the key...

Question 16

Explain how to compute dividend yield and discuss how it is used in analysis of a company's financial condition.

Accepted Answer

The answer of Explain how to compute dividend yield and...

Question 17

Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 5,000 shares of common stock with a $10 par value.During the first three years of operation,the corporation declared and paid the following total cash dividends.
$$\begin{array} { c c r } 
& \text { Dividend Declared } \
\text { year 1 } & \$ 2,000 \
\text { year 2 } & \$ 6,000 \
\text { year 3 } & \$ 32,000
\end{array}$$

The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Accepted Answer

The answer of Sweet Company's outstanding stock consists of 1,000...

Question 18

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

Accepted Answer

$0.50 * (190,000 shares - 10,000 shares) = $90,000

Question 19

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Accepted Answer

$0.50 * (190,000 shares - 10,000 shares) = $90,000

Question 20

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.

Accepted Answer

The answer of Explain how to calculate the price-earnings ratio...

Quiz 11: Corporate Reporting and Analysis

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:

All of the following regarding accounting for Treasury Stock under U.S.GAAP and IFRS is true except:

Fetzer Company declared a $0.55 per share cash dividend.The company has 200,000 shares authorized,190,000 shares issued,and 8,000 shares in treasury stock.The journal entry to record the dividend declaration is:

A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share.The entry to record this transaction would be:

What are the rights generally granted to common stockholders?

What is a corporation? Identify the key advantages and disadvantages of corporations.

Explain how to compute dividend yield and discuss how it is used in analysis of a company's financial condition.

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the payment of the dividend is:

West Company declared a $0.50 per share cash dividend.The company has 190,000 shares issued,and 10,000 shares in treasury stock.The journal entry to record the dividend declaration is:

Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance.