Question 1

Required:
Compute the ROE for 2013 and 2014 using the DuPont model.

Accepted Answer

The answer of   
Required:
Compute the ROE for 2013...

Question 2

On January 1, Maxine Corp. entered into a subscription contract for 100 shares of its $20 par common stock at a price of $50 per share. The contract required on a per share basis an immediate down payment of $10 and two $20 payments on February 1 and March 1 from subscribers. All the down payments were received on January 1 and all the installments due on February 1 were received on February 1. On March 1, the rest of the payments were received except from one subscriber of ten shares, who defaulted. These shares were later sold for $40 per share. An amount necessary to bring the proceeds up to the total subscription price was retained and the balance of the payments received from the defaulted subscriber was returned.
Required:

Accepted Answer

The answer of On January 1, Maxine Corp. entered into...

Question 3

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013:

Assume the cost method is used.
-Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2013 would include a

Accepted Answer

The entry to record the retirement of 100 shares on 5/10/2013 would include a credit to Additional Paid-in Capital from Treasury Stock for $200. This is because the treasury stock is being retired, which means that it is being removed from the company's outstanding shares. The company has a loss of $200 on the retirement of the treasury stock, which is debited to Additional Paid-in Capital from Treasury Stock.

Question 4

During 2014, Goodfellow has the following transactions involving its common and preferred stock: 
a.Issued 15,000 shares of $5 par common stock for $15 a share. This brings total shares outstanding to 50,000 shares.
b.Issued 5,000 shares of $100 par, 6%, cumulative preferred stock for $121 per share.
c.When the market value of the common stock reached $15 a share, Goodfellow declared a 3-for-1 stock split, reducing the par value to $1.67 per share.
Required:
Prepare a journal entry for each transaction.

Accepted Answer

The answer of During 2014, Goodfellow has the following transactions...

Question 5

The following information is provided for Miller Corporation:

What is the amount of contributed capital for Miller Corporation?

Accepted Answer

The answer of The following information is provided for Miller...

Question 6

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013:  Assume the cost method is used.
-Refer to Exhibit 15-9. The entry to record the reissuance of 400 shares on 4/8/2013 would include a

Accepted Answer

The answer of Exhibit 15-9 Groundcover, Inc. had never had...

Question 7

When a company acquires treasury stock, what effect does this transaction have on earnings per share and legal capital, respectively?

Accepted Answer

Acquiring treasury stock reduces the number of shares outstanding, which can increase earnings per share if all other factors remain constant. It does not affect legal capital because treasury stock transactions are equity transactions, not involving the company's legal capital.

Question 8

Which one of the following statements is not true?

Accepted Answer

Treasury stock transactions may result in a decrease to retained earnings, not an increase. When treasury stock is purchased for more than its cost, retained earnings decrease. When it is sold for more than cost, retained earnings increase.

Question 9

Under the par value method of accounting for treasury stock, the treasury stock is reported on the balance sheet as a deduction from

Accepted Answer

Under the par value method, treasury stock is recorded at cost and is deducted from capital stock on the balance sheet. Therefore, the correct answer is C) capital stock.

Question 10

Listed below are various classifications of corporations. Following the list is a series of descriptive statements.   Required:
Match the corporate classifications to the descriptive statements that best describe them.

Accepted Answer

The answer of Listed below are various classifications of corporations....

Question 11

If a company does not maintain its treasury stock records on a specific identification basis, which of the following approaches may be used to record a reduction in the treasury stock account when the stock is reissued?

Accepted Answer

If a company does not maintain its treasury stock records on a specific identification basis, the FIFO or average costing approach may be used to record a reduction in the treasury stock account when the stock is reissued. This is because the FIFO and average costing methods assume that the first shares acquired are the first shares sold or reissued, which is similar to specific identification. LIFO costing is not appropriate in this situation as it assumes that the last shares acquired are the first sold or reissued.

Question 12

Which one of the following statements concerning treasury stock is true?

Accepted Answer

Treasury stock does not carry voting rights and does not participate in dividend distributions. It also does not retain the preemptive right. However, it can participate in stock splits if the company chooses to do so.

Question 13

The following information is provided for Wolf Company: 
If total contributed capital is $506,000, what is the amount of additional paid-in capital on common stock for Wolf Company?

Accepted Answer

The answer of The following information is provided for Wolf...

Question 14

Martian Magic issued 800 shares of $50 par preferred stock and 1000 shares of $1 par common stock in a "package" sale for $150,000. The preferred stock market value was $88 per share, and the common stock market value was $156 per share.
Required:
Fill in the lines below to indicate the accounts and amounts credited in the entry to record the issuance of the stock.

Accepted Answer

The answer of Martian Magic issued 800 shares of $50...

Question 15

Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as a(n)

Accepted Answer

When the proceeds from a sale of treasury stock are greater than the cost, the excess over cost is treated as an increase in Additional Paid-in Capital from Treasury Stock. This account reflects the amount of capital that shareholders have contributed to the company above the par or stated value of the stock. The excess over cost is not recognized as income, but rather as an increase in the amount of capital that the company has received. A and C are incorrect because they do not reflect the appropriate treatment of the excess over cost. D is incorrect because there is a correct answer to this question.

Question 16

The following are a list of terms.  Required:
Match the following definition with the terms listed above.

Accepted Answer

The answer of The following are a list of terms....

Question 17

When a company reacquires its own stock, the entry to record the reacquisition could include an entry to Additional Paid-in Capital under which of the following methods?

Accepted Answer

The answer of When a company reacquires its own stock,...

Question 18

When retiring treasury stock, retained earnings could be affected under which of the following methods?

Accepted Answer

The answer of When retiring treasury stock, retained earnings could...

Question 19

Righty, Inc., entered into a stock subscription contract that called for the purchase by investors of 15,000 shares of $12 par common stock at a price of $30 per share. The contract required a down payment of $15 per share, with the remaining $18 per share collectible at the end of three months.
Required: 
a.Prepare the journal entry to record the stock subscription and down payment.
b.The subscribers paid the remainder at the end of three months. Prepare the journal entry(ies) to record the final payment and the issuance of the shares of stock.

Accepted Answer

The answer of Righty, Inc., entered into a stock subscription...

Question 20

All of the following would appear in the contributed capital section of stockholders' equity on the balance sheet except

Accepted Answer

Bonds payable represents a liability and would not appear in the contributed capital section of stockholders' equity. The other options - additional paid-in capital from stock conversions, share rights and options, and preferred stock - are all forms of equity and would be included in the contributed capital section.

Quiz 15: Contributed Capital

Required: Compute the ROE for 2013 and 2014 using the DuPont model.

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013: Assume the cost method is used. -Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2013 would include a

The following information is provided for Miller Corporation: What is the amount of contributed capital for Miller Corporation?

Exhibit 15-9 Groundcover, Inc. had never had a treasury stock transaction prior to 2013. It experienced the following treasury stock transactions during 2013: Assume the cost method is used. -Refer to Exhibit 15-9. The entry to record the reissuance of 400 shares on 4/8/2013 would include a