Question 1

The dividend yield is computed by dividing:

Accepted Answer

The dividend yield is calculated by dividing the annual cash dividends per share by the market value per share. This gives an indication of the return on investment from dividends for a shareholder. It is expressed as a percentage.

Question 2

Djarleen Company has 10,000 shares of $10 par preferred stock, which were issued at par. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is:

Accepted Answer

The preferred stock has no impact on the book value per common share, as it is a separate class of stock. 
Book value per common share = (total stockholders' equity - preferred stock)/number of common shares outstanding 
= ($4,000,000 - $0)/250,000 
= $16.00

Question 3

A company paid $0.48 in cash dividends per share. Its earnings per share is $3.20 and its market price per share is $20.00. Its dividend yield equals:

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The answer of A company paid $0.48 in cash dividends...

Question 4

A company has 50,000 shares of common stock outstanding. The stockholders' equity applicable to common shares is $1,470,000, and the par value per common share is $5. The book value per share is:

Accepted Answer

The answer of A company has 50,000 shares of common...

Question 5

Comfort Mattresses, Inc. sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share. The entry to record this transaction would be:

Accepted Answer

The entry to record the sale of common stock entails debiting cash for the total cash received ($312,000) and crediting both common stock for the par value of the shares ($26,000) and paid-in capital in excess of par value, common stock for the excess of the cash received over the par value of the shares sold ($286,000). This is the appropriate entry as per generally accepted accounting principles (GAAP).

Question 6

A company has net income of $90,000; its weighted-average common shares outstanding are 18,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

Accepted Answer

- First, we need to calculate the earnings per share (EPS) of the company:
EPS = net income / weighted-average common shares outstanding
EPS = $90,000 / 18,000
EPS = $5
- The dividend per share is given as $0.45, so we can calculate the dividend yield:
Dividend yield = dividend per share / market price per share
Dividend yield = $0.45 / $88
Dividend yield = 0.0051 or 0.51%
- To calculate the price-earnings (P/E) ratio, we need to divide the market price per share by the EPS:
P/E ratio = market price per share / EPS
P/E ratio = $88 / $5
P/E ratio = 17.6
Therefore, the answer is B.

Question 7

Stocks that pay relatively large cash dividends on a regular basis are called:

Accepted Answer

Stocks that pay relatively large cash dividends on a regular basis are called income stocks. These stocks are popular among income-oriented investors who are looking for a steady stream of income from their investments.

Question 8

Wiggins Company has 1,000 shares of $10 par preferred stock, which were issued at par. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is:

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The answer of Wiggins Company has 1,000 shares of $10...

Question 9

Dividend yield is the percent of cash dividends paid to common shareholders relative to the:

Accepted Answer

The answer of Dividend yield is the percent of cash...

Question 10

A company has 500 shares of $50 par value preferred stock outstanding, and the call price of its preferred stock is $60 per share. It also has 20,000 shares of common stock outstanding, and the total value of its stockholders' equity is $680,000. The company's book value per common share equals:

Accepted Answer

The value of the preferred stock is:
500 shares x $50 par value = $25,000
Since the call price is $60 per share, the company would need to pay $30,000 to call in all the preferred shares ($60 x 500).
The total value of the company's equity is $680,000 - $30,000 (for the preferred stock) = $650,000.
The book value per common share is then:
$650,000 / 20,000 shares = $32.50 per share.

Question 11

A company paid $0.85 in cash dividends per share. Its earnings per share is $3.50, and its market price per share is $35.50. Its dividend yield equals:

Accepted Answer

Dividend yield is calculated by dividing the annual dividend per share by the current market price per share, and then multiplying by 100 to get a percentage. 
Dividend yield = (Annual dividend per share / Current market price per share) x 100
In this case, the annual dividend per share is $0.85, so we need to calculate the total dividend paid for the year by multiplying that by the number of shares outstanding (which is not given in the problem). 
However, we can use the earnings per share to estimate the dividend payout ratio, which tells us what percentage of earnings are being paid out as dividends. 
Dividend payout ratio = Dividends per share / Earnings per share
In this case, the dividend payout ratio is:
Dividend payout ratio = $0.85 / $3.50 = 0.2429 (or 24.29%)
This means that for every $1 of earnings, the company is paying out $0.2429 in dividends. 
Now we can estimate the annual dividend for one share of stock by multiplying the earnings per share by the dividend payout ratio:
Annual dividend per share = $3.50 x 0.2429 = $0.85 (rounded)
So, the dividend yield is:
Dividend yield = ($0.85 / $35.50) x 100 = 2.39% (rounded to nearest hundredth)
Therefore, the best choice is B, with a dividend yield of 2.4%.

Question 12

Book value per share:

Accepted Answer

The answer of Book value per share:
...

Question 13

The Discount on Common Stock account reflects:

Accepted Answer

The Discount on Common Stock account reflects the difference between the par value of stock and its issue price when it is issued at a price below par value. This account is created when a corporation issues stock at a discount to attract investors. It represents the reduction in the value of the company's equity due to the lower price at which the stock was issued.

Question 14

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

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The answer of A corporation issued 6,000 shares of its...

Question 15

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

Accepted Answer

The issuance of stock in exchange for services rendered in the formation of the corporation is considered an organizational expense, which is a type of expense that is incurred during the startup phase of a company. Therefore, the entry to record this transaction would debit Organization Expenses for $5,000 (the amount of the charge), and credit Common Stock for $4,000 (400 shares * $10 par value). There is no need to record any additional paid-in capital in excess of par value since the stock was issued at par value.

Question 16

A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals:

Accepted Answer

The company's price-earnings ratio can be calculated as:
P/E Ratio = Market Price per share / Earnings per share
P/E Ratio = $110 / $9.60
P/E Ratio = 11.46
Therefore, the answer is D) 11.46.

Question 17

The amount of annual cash dividends distributed to common shareholders relative to the common stock's market value is the:

Accepted Answer

The dividend yield is calculated by dividing the annual cash dividends distributed by the common stock's market value. It is expressed as a percentage and provides investors with an indication of the income they can expect to receive from an investment in a particular stock.

Question 18

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

Accepted Answer

The answer of A corporation sold 14,000 shares of its...

Question 19

A corporation issued 100 shares of its $5 par value common stock in payment of a $1,800 charge from its accountant for assistance in filing its charter with the state. The entry to record this transaction will include:

Accepted Answer

The answer of A corporation issued 100 shares of its...

Question 20

Book value per common share is computed by:

Accepted Answer

Book value per common share is calculated by dividing the stockholders' equity applicable to common shares by the number of common shares outstanding. This calculation gives investors an idea of the value of the company's assets that would be left over for common shareholders after all liabilities have been paid off.

Quiz 13: Accounting for Corporations