Question 1

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{|l|l|}\hline \text { Common stock } \$ 10 \text { par value } 20,000 \text { shares authorized and } 10,000\\text { shares issued, } 9,000 \text { shares outstanding }&\$100,000\
\hline \text { Paid-in capital in excess of par value, common stock } & 50,000 \
\hline \text { Retained earnings } & 25,000 \
\hline \text { Treasury stock } & 11,500 \
\hline
\end{array}$ Assuming the treasury shares were all purchased at the same price, the cost per share of the treasury stock is:

Accepted Answer

The cost per share of the treasury stock is calculated by dividing the total cost of the treasury stock by the number of treasury shares. The company has 1,000 treasury shares (10,000 issued - 9,000 outstanding), and the total cost is $11,500. Therefore, the cost per share is $11,500 / 1,000 = $11.50.

Question 2

What are the rights generally granted to common stockholders?

Accepted Answer

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

Question 3

The following data has been collected about Keller Company's stockholders' equity accounts: $\begin{array}{|l|l|}\hline \text { Common stock } \$ 10 \text { par value } 20,000 \text { shares authorized and } 10,000\\text { shares issued, } 9,000 \text { shares outstanding }&\$100,000\
\hline \text { Paid-in capital in excess of par value, common stock } & 50,000 \
\hline \text { Retained earnings } & 25,000 \
\hline \text { Treasury stock } & 11,500 \
\hline
\end{array}$ Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is:

Accepted Answer

The treasury stock value is $11,500, and the par value of the common stock is $10. Therefore, the number of treasury shares is $11,500 / $10 = 1,150 shares.

Question 4

Explain stock options and their effect on the company.

Accepted Answer

The answer of Explain stock options and their effect on...

Question 5

What is a stock split? How is a stock split different from a stock dividend?

Accepted Answer

The answer of What is a stock split? How is...

Question 6

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 7

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 no par common stock, the entire amount received is credited to Common Stock. The entry to record the issuance of 2,500 shares at a cash price of $11 per share would be:

Debit Cash $27,500; credit Common Stock $27,500.

Question 8

What is treasury stock? What reasons might a company hold treasury stock?

Accepted Answer

The answer of What is treasury stock? What reasons might...

Question 9

Explain how to compute book value per common share and discuss how it can be used to analyze the financial condition of a corporation.

Accepted Answer

The answer of Explain how to compute book value per...

Question 10

How is the retirement of stock recorded?

Accepted Answer

The answer of How is the retirement of stock recorded?...

Question 11

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 answer of A corporation issued 5,000 shares of its...

Question 12

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

The dividend is calculated as follows: $0.55 per share x 190,000 shares outstanding = $104,500. The dividend is payable to the outstanding shares, so the shares in treasury stock are not included in the journal entry. The entry to record the declaration of the dividend is to debit Retained Earnings for $100,100 and credit Common Dividends Payable for $100,100.

Question 13

Explain the difference between a large stock dividend and a small stock dividend. In addition, explain how to record these two types of stock dividends.

Accepted Answer

The answer of Explain the difference between a large stock...

Question 14

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 15

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

The answer of Prior to June 30, a company has...

Question 16

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

The journal entry to record the payment of the dividend would be to debit Common Dividends Payable for $100,100 and credit Cash for $100,100. The calculation for the dividend payment is:
$0.55 per share x (190,000 shares issued - 8,000 treasury shares) = $100,100.

Question 17

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

The answer of Prior to May 1, Fortune Company has...

Question 18

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

The cost method is used for treasury stock accounting. 
On June 30: 
- Treasury Stock account is debited for $4,000 (100 shares x $40 per share). 
- Cash account is credited for $4,000. 
On July 20: 
- Cash account is debited for $2,300 (50 shares x $46 per share). 
- Treasury Stock account is credited for $2,300. 
- The cost of the remaining 50 shares in the Treasury Stock account is $1,700 (50 shares x $34 per share). 
On August 1: 
- Cash account is debited for $760 (20 shares x $38 per share). 
- Treasury Stock account is credited for $760. 
- The cost of the remaining 30 shares in the Treasury Stock account is $940 (30 shares x $31.33 per share). 
Therefore, the balance in the Treasury Stock account on August 2 is $940. Answer choice (D) is correct.

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 payment of the dividend is:

Accepted Answer

The journal entry to record the payment of the dividend should debit Common Dividends Payable for the total amount of the dividend, which is $90,000 ($0.50 x 180,000 shares outstanding), and credit Cash for the same amount. Therefore, the correct option is D, which debits Common Dividends Payable for $90,000 and credits Cash for $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