COB 202: Ch 11 EXAM QUESTIONS AND CORRECT DETAILED ANSWERS|AGRADE

COB 202: Ch 11 EXAM QUESTIONS AND CORRECT DETAILED ANSWERS|AGRADE when a corporation purchases its own stock, the stock purchased is called ... stock - ANSWER- treasury purchasing treasury stock is a - ANSWER- asset use transaction Assume Stanley Company paid $25 per share to purchase 200 shares of its $10 par value common stock. Stanley reissues 100 shares of the treasury stock for $20 per share. Assume there were no previous treasury stock transactions. Then... - ANSWERLosses are not recognize on the sale of treasury stock - corporations do NOT recognize gains or losses on the sale of treasury stock there would be no impact on the income statement the journal entry to record the issue of no par value stock for $25 cash will include a ... to the cash account, a ... to the common stock account - ANSWER- debit credit ... stock is normally listed before ... stock in the stockholders' section of the balance sheet - ANSWER- Preferred Common match the following terms: 1) authorized stock 2) issued stock 3) outstanding stock 4) treasury stock - ANSWER- 1) number of shares of stock a corporation has state approval to issue 2) stock a company has sold to the public 3) shares of stock a corporation has issued that has been issued less any treasury stock the corporation has repurchased 4) stock previously issued to the public that the issuing corporation has bought back. contrast with outstanding stock a stock split will have - ANSWER- NO EFFECT on total stockholders' equity NO EFFECT on total assets Fontaine Inc decide to issue a 10% stock dividend on its $20 par value common stock. On the distribution date, the market value of the stock was $25; there were 12,000 shares of stock issued; and 10,000 shares of stock outstanding. Recognizing the stock dividend will cause an increase in the amount of additional paid-in capital in excess of par value of - ANSWER- $5,000 $25 market value - $20 par value = $5 additional paid-in capital in excess of par value X (10,000 shares x 10% dividend) = $5,000 Fontaine Inc decide to issue a 10% stock dividend on its $20 par value common stock. On the distribution date, the market value of the stock was $25; there were 12,000 shares of stock issued; and 10,000 shares of stock outstanding. Recognizing the stock dividend will cause an decrease in the amount of retained earnings of - ANSWER- $25,000 $25 market value x 10,000 shares outstanding x 0.10 stock dividend = $25,000 decrease in retained earnings stock dividends are based on the number of shares... - ANSWER- outstanding which of the following statements is TRUE - ANSWER- preferred stock dividends in arrears must be paid before dividends can be distributed to common stockholders if a company skips a dividend on noncumulative preferred stock, the dividend is lost forever which of the following are common rights assigned to investors who own common stock - ANSWER- 1) the right to buy and sell stock 2) the right to share in the distribution of profits 3) the right to share in the distribution of corporate assets in the case of liquidation 4) the right to vote on significant matters that affect the corporate charter 5) the right to participate in the election of directors Cloud company has 5K shares of 6% , $20 par value cumulative preferred stock outstanding. The company has also 8K shares of $10 par value common stock outstanding. Cloud paid no dividends in Y! or Y2. In Y3, Cloud paid $30K of cash dividends. What was the amount of dividends paid to preferred stockholders - ANSWER- $18,000 5,000 shares x $20 x 6% = $6,000 annual preferred dividend. The preferred stockholders will receive two years of dividends that are in arrears plus the dividend due for the current year for a total of $18,000 of dividends ($6,000 x 3 years) cumulative dividends - ANSWER- may also be called dividends in arrears are dividends that accumulate for future payment when a company fails to pay a periodic dividend Cloud company has 5K shares of 6% , $20 par value cumulative preferred stock outstanding. The company has also 8K shares of $10 par value common stock outstanding. Cloud paid no dividends in Y! or Y2. In Y3, Cloud paid $30K of cash dividends in a year when no dividends were in arrears. Based on this info - ANSWER- $6,000 would be paid to preferred stockholders and $24,000 would be paid to common stockholders 5,000 shares x $20 x 6% = $6,000 annual due to preferred stockholders. $30,000 total dividend - $6,000 preferred stock distribution = $24,000 common stock distribution The price-earning ratio is calculated by dividing ... ... per share by ... per share - ANSWER- market price