Question 1

R Co.has outstanding 100 million shares,$1 par common stock,selling for $8 per share.After a 1 for 4 reverse stock split:

Accepted Answer

A 1 for 4 reverse stock split means that for every 4 shares a shareholder owns, they will receive 1 new share. Therefore, with the outstanding 100 million shares, the new total number of shares would be 25 million (100 million divided by 4). The par value per share would increase to $4 (1 x $4 = $4). The market price per share would not change due to the stock split, so it would continue to be $8. Fractional shares would not be issued since the split ratio is a whole number. Retained earnings would also not be affected by the stock split.

Question 2

Lucid Company declared a property dividend of 20,000 shares of $1 par Polk Company common stock.The Polk stock was purchased for $5 per share.Market value was $10 per share on the declaration date and $11 per share on the distribution date.What is the amount of the dividend?

Accepted Answer

The amount of the dividend is based on the market value of the property on the declaration date. Therefore, the dividend is 20,000 shares x $10 per share = $200,000.

Question 3

Revenue and expense items and components of other comprehensive income can be reported in a single statement of comprehensive income using:

Accepted Answer

Both U.S.GAAP and IFRS allow for the reporting of revenue and expense items along with components of other comprehensive income in a single statement of comprehensive income. This statement is meant to provide a more complete picture of a company's financial performance and changes in equity over a given period of time.

Question 4

When a property dividend is declared,the property to be distributed should be revalued to fair value as of the:

Accepted Answer

The answer of When a property dividend is declared,the property...

Question 5

On January 1,2016,the board of directors of Goby Inc.declared a $540,000 dividend.The following data is from the balance sheet of Goby on that date:

How much is the liquidating dividend?

Accepted Answer

The answer of On January 1,2016,the board of directors of...

Question 6

When a company issues a stock dividend,which of the following would be affected?

Accepted Answer

The answer of When a company issues a stock dividend,which...

Question 7

Beagle Corporation has 20,000 shares of $10 par common stock outstanding and 10,000 shares of $100 par,6% cumulative,nonparticipating preferred stock outstanding.Dividends have not been paid for the past two years.This year,a $300,000 dividend will be paid.What are the dividends per share payable to preferred and common,respectively?

Accepted Answer

The preferred stock is cumulative, which means that any missed dividends must be paid before common stockholders can receive dividends. Therefore, the total amount of missed dividends for the preferred stock is:
(2 years) x ($100 par value) x (6% annual dividend rate) = $12 per share

This means that before any dividends can be paid to common stockholders, $120,000 ($12 x 10,000 shares) must be paid to preferred stockholders.

After paying the $120,000 to preferred stockholders, there is $180,000 ($300,000 - $120,000) left to be distributed as dividends. The dividends per share for common stock are:
($180,000 total dividends) / (20,000 common shares outstanding) = $9 per share

However, since the preferred stock is cumulative, they are entitled to receive the $6 in missed dividends plus their current year dividend of $6, for a total of $12 per share. Therefore, the dividends per share payable to preferred and common, respectively, are $12 and $9.

So, the closest answer choice is B, with preferred dividends of $18 per share instead of $12.

Question 8

At the beginning of 2014,Emily Corporation issued 10,000 shares of $100 par,5%,cumulative,preferred stock for $110 per share.No dividends have been paid to preferred or common shareholders.What amount of dividends will a preferred shareholder owning 100 shares receive in 2016 if Emily pays $1,000,000 in dividends?

Accepted Answer

The preferred shareholder will receive dividends for 2014, 2015, and 2016. Each year, the dividend is $5 per share (5% of $100 par value). For 100 shares, this is $500 per year. Over three years, the total is $1,500.

Question 9

Mandatorily redeemable preferred stock (preference shares)is reported as debt,with the dividends reported in the income statement as interest expense,using:

Accepted Answer

The answer of Mandatorily redeemable preferred stock (preference shares)is reported...

Question 10

A small stock dividend is defined as one that is:

Accepted Answer

The answer of A small stock dividend is defined as...

Question 11

Heidi Aurora Imports applies International Financial Reporting Standards.The company issued shares of the company's Class B stock.Heidi Aurora Imports should report the stock in the company's statement of financial position:

Accepted Answer

Under IFRS, shares that are mandatorily redeemable or redeemable at the option of the shareholder are classified as liabilities, not equity.

Question 12

The board of directors of Capstone Inc.declared a $0.60 per share cash dividend on its $1 par common stock.On the date of declaration,there were 50,000 shares authorized,20,000 shares issued,and 5,000 shares held as treasury stock.What is the entry for the dividend declaration?

Accepted Answer

The answer of The board of directors of Capstone Inc.declared...

Question 13

Pug Corporation has 10,000 shares of $10 par common stock outstanding and 20,000 shares of $100 par,6% noncumulative,nonparticipating preferred stock outstanding.Dividends have not been paid for the past two years.This year,a $150,000 dividend will be paid.What are the dividends per share for preferred and common,respectively?

Accepted Answer

The answer of Pug Corporation has 10,000 shares of $10...

Question 14

Stock splits are issued primarily to:

Accepted Answer

The answer of Stock splits are issued primarily to:
...

Question 15

F Co.declares a 5% stock dividend.If the market price at declaration is $12 per share,a shareholder with 110 shares likely would receive:

Accepted Answer

The answer of F Co.declares a 5% stock dividend.If the...

Question 16

Under IFRS,components of other comprehensive income:

Accepted Answer

Under IFRS, components of other comprehensive income can be reported as part of a single statement of comprehensive income or in a separate statement of comprehensive income immediately following the income statement.

Question 17

The declaration and issuance of a stock dividend on shares of common stock:

Accepted Answer

The answer of The declaration and issuance of a stock...

Question 18

Which of the following statements is true with regard to preferred stock (preference shares)?

Accepted Answer

The answer of Which of the following statements is true...

Question 19

Which of the terms or phrases listed below is more associated with financial statements prepared in accordance with U.S.GAAP than with International Financial Reporting Standards?

Accepted Answer

Accumulated other comprehensive income is more commonly used in financial statements prepared in accordance with U.S. GAAP than with International Financial Reporting Standards.

Question 20

ABC declared a property dividend.The dividend consisted of 10,000 common shares of its investment in XYZ Company.The shares had originally been purchased at $4 per share and had a $1 par value.The value of the shares on the declaration date is $7 per share.What is the first entry that should be recorded related to this dividend?

Accepted Answer

The answer of ABC declared a property dividend.The dividend consisted...

Quiz 18: Shareholders Equity