Question 1

The balance sheet of Sand Sportswear reports total equity of $500,000 and $650,000 at the beginning and end of the year,respectively.The return on equity for the year is 20%.What is Sand Sportswear's net income for the year?

Accepted Answer

The answer of The balance sheet of Sand Sportswear reports...

Question 2

Financial information for Accessories Unlimited includes the following selected data: What is the company's price-earnings ratio?
$$\begin{array} { | l r | } 
\hline \text { Net income (in millions) } & \$ 150 \
\hline \text { Shares outstanding (in millions) } & 300 \
\text { Stock price } & \$ 20.00 \
\hline
\end{array}$$

Accepted Answer

The answer of Financial information for Accessories Unlimited includes the...

Question 3

How does the stockholders' equity section in the balance sheet differ from the statement of stockholders' equity?

Accepted Answer

The stockholders' equity section in the balance sheet shows the balances of various components of stockholders' equity at a specific point in time, whereas the statement of stockholders' equity shows the activity and changes in different components of stockholders' equity over a certain period of time.

Question 4

The stockholders' equity section in the balance sheet shows:

Accepted Answer

The stockholders' equity section in the balance sheet shows the ending balance in each stockholders' equity account. It does not show how each equity account changed over time or the average balance in each stockholders' equity account.

Question 5

Clothing Emporium was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.What is the ending balance in the Retained Earnings account at the end of 2018?

Accepted Answer

The ending balance in the Retained Earnings account is calculated by starting with the beginning balance (which is $0 since the company was organized on January 1, 2018), adding net income, and subtracting dividends paid. Therefore, the calculation is $0 + $100,000 - $50,000 = $50,000.

Question 6

Financial information for Accessories Unlimited includes the following selected data: What is the company's earnings per share?
$$\begin{array} { | l r | } 
\hline \text { Net income (in millions) } & \$ 150 \
\hline \text { Shares outstanding (in millions) } & 300 \
\text { Stock price } & \$ 20.00 \
\hline
\end{array}$$

Accepted Answer

Earnings per share (EPS) is calculated by dividing the net income by the number of shares outstanding. Thus, EPS = $150 million / 300 million = $0.50.

Question 7

Clothing Emporium was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.What is the total stockholders' equity at the end of 2018?

Accepted Answer

Total stockholders' equity is the sum of the par value of the shares issued, additional paid-in capital, and retained earnings. In this case, the par value of the shares issued is $150,000 (30,000 shares x $5 par value + 20,000 shares x $5 par value), the additional paid-in capital is $60,000 (30,000 shares x $2 per share + 20,000 shares x $3 per share), and the retained earnings are $100,000. Therefore, the total stockholders' equity is $420,000.

Question 8

Beach Boards reports dividends per share of $1.40 and net income for the year of $150,000.Dividend yield is 3.5%.What is Beach Boards' current stock price?

Accepted Answer

The answer of Beach Boards reports dividends per share of...

Question 9

Financial information for Accessories Unlimited includes the following selected data: What is the company's dividend yield?
$$\begin{array} { | l r | } 
\hline \text { Dividends (in millions) } & \$ 75 \
\hline \text { Shares outstanding (in millions) } & 300 \
\text { Stock price } & \$ 20.00 \
\hline
\end{array}$$

Accepted Answer

The dividend yield is calculated by dividing the annual dividends per share by the price per share. First, find the annual dividends per share: $75 million / 300 million shares = $0.25 per share. Then, divide this by the stock price of $20.00: $0.25 / $20.00 = 0.0125, or 1.25%.

Question 10

Roberto Designers was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).What is total stockholders' equity at the end of 2018?

Accepted Answer

The answer of Roberto Designers was organized on January 1,2018.The...

Question 11

The statement of stockholders' equity shows:

Accepted Answer

The statement of stockholders' equity shows how each equity account changed over time, including the beginning balance, any changes during the period, such as dividends or stock issuances, and the ending balance.

Question 12

California Clothing reports net income and sales for the year of $65,000 and $1,300,000,respectively.Return on equity is 10%.What is California Clothing's average Stockholders' Equity for the year?

Accepted Answer

Return on equity (ROE) is calculated as Net Income divided by Average Stockholders' Equity. Given ROE is 10% and Net Income is $65,000, we can set up the equation: $65,000 / Average Stockholders' Equity = 0.10. Solving for Average Stockholders' Equity gives $650,000.

Question 13

Dividend Yield is calculated as:

Accepted Answer

Dividend yield is the ratio of the annual dividend payment per share to the current market price per share. Dividends per share divided by the stock price is the correct formula to calculate dividend yield. Therefore, option A is the correct answer. Option B is the formula to calculate return on equity, and option C is the reciprocal of dividend yield.

Question 14

The statement of stockholders' equity shows:

Accepted Answer

The statement of stockholders' equity shows more information than the stockholders' equity section in the balance sheet, including the beginning and ending balances, changes in the account balances, and the details of any transactions that affected the balances.

Question 15

Clothing Emporium was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.What is total paid-in capital at the end of 2018?

Accepted Answer

The total paid-in capital at the end of 2018 consists of the par value of the common stock plus any additional paid-in capital from issuing the stock.

The par value of the 50,000 shares outstanding at the end of the year is:
50,000 shares × $5 par value per share = $250,000

The additional paid-in capital from issuing 30,000 shares at $7 per share and 20,000 shares at $8 per share is:
30,000 shares × ($7 per share - $5 par value per share) = $60,000
20,000 shares × ($8 per share - $5 par value per share) = $60,000
Total additional paid-in capital = $120,000

Therefore, the total paid-in capital at the end of 2018 is:
$250,000 (par value) + $120,000 (additional paid-in capital) = $370,000.

The correct answer is B, $370,000.

Question 16

The Common Stock account on a company's balance sheet is measured as:

Accepted Answer

Common stock is typically recorded at its par value, which is the nominal value assigned to each share of stock when it is issued. Therefore, the Common Stock account is measured as the number of common shares issued multiplied by the stock's par value per share. Option A is incorrect because it only takes into account the common shares outstanding, not the number of shares issued. Option B is incorrect because it uses the stock's current market value per share, which is not the basis for measuring the Common Stock account.

Question 17

Roberto Designers was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Roberto had the following transactions relating to stockholders' equity: Issued 10,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8).What is the balance in the Treasury Stock account at the end of 2018?

Accepted Answer

The balance in the Treasury Stock account at the end of 2018 can be calculated by multiplying the number of treasury shares purchased (3,000) by the purchase price per share ($10), which equals $30,000. Therefore, the correct choice is C.

Question 18

The balance sheet of California Clothing reports total equity of $600,000 and $700,000 at the beginning and end of the year,respectively.Net income and sales for the year are $65,000 and $1,300,000,respectively.What is California Clothing's return on equity?

Accepted Answer

Return on equity (ROE) is calculated as Net Income divided by Average Equity. The average equity is ($600,000 + $700,000) / 2 = $650,000. ROE = $65,000 / $650,000 = 0.10 or 10%.

Question 19

Clothing Emporium was organized on January 1,2018.The firm was authorized to issue 100,000 shares of $5 par value common stock.During 2018,Clothing Emporium had the following transactions relating to shareholders' equity: Issued 30,000 shares of common stock at $7 per share.Issued 20,000 shares of common stock at $8 per share.Reported a net income of $100,000.Paid dividends of $50,000.What is the total amount recorded in the Common Stock account at the end of 2018?

Accepted Answer

The Common Stock account is recorded at par value. The firm issued 50,000 shares (30,000 + 20,000) at a par value of $5, so the total amount recorded in the Common Stock account is 50,000 shares x $5 = $250,000.

Question 20

Beach Boards reports dividends per share of $1.40 and net income for the year of $150,000.The current stock price is $40.00.What is Beach Boards' dividend yield?

Accepted Answer

The answer of Beach Boards reports dividends per share of...

Quiz 10: Stockholders Equity

The balance sheet of Sand Sportswear reports total equity of $500,000 and $650,000 at the beginning and end of the year,respectively.The return on equity for the year is 20%.What is Sand Sportswear's net income for the year?

How does the stockholders' equity section in the balance sheet differ from the statement of stockholders' equity?

The stockholders' equity section in the balance sheet shows:

Beach Boards reports dividends per share of $1.40 and net income for the year of $150,000.Dividend yield is 3.5%.What is Beach Boards' current stock price?

The statement of stockholders' equity shows:

California Clothing reports net income and sales for the year of $65,000 and $1,300,000,respectively.Return on equity is 10%.What is California Clothing's average Stockholders' Equity for the year?

Dividend Yield is calculated as:

The statement of stockholders' equity shows:

The Common Stock account on a company's balance sheet is measured as:

The balance sheet of California Clothing reports total equity of $600,000 and $700,000 at the beginning and end of the year,respectively.Net income and sales for the year are $65,000 and $1,300,000,respectively.What is California Clothing's return on equity?

Beach Boards reports dividends per share of $1.40 and net income for the year of $150,000.The current stock price is $40.00.What is Beach Boards' dividend yield?