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Exam 18: Shareholders Equity

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Question 21

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The shareholders' equity section of Time Company's comparative balance sheets for the years ended December 31, 2018 and 2017, reported the following data: During 2018, Time declared and paid cash dividends of $90 million. The company also declared and issued a stock dividend. No other changes occurred in shares outstanding during 2018. What was Time's net income for 2018?

A) $28 million
B) $118 million
C) $130 million
D) $178 million

E) A) and C)
F) A) and B)

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Question 22

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Identify the three common forms of business organization and the primary difference in the way we account for them.

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The three primary ways a company can be ...

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Question 23

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The net assets of a corporation are equal to:

Which of the following statements is true with regard to preferred stock (preference shares) ?

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Limited liability company

When preferred stock is purchased by the issuing corporation at a price below the original issue price and the stock is retired, the transaction:

On October 1, 2018, Chief Corporation declared and issued a 10% stock dividend. Before this date, Chief had 80,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:

When more than one security is sold for a single price and the total selling price is not equal to the sum of the market prices, the cash received is allocated between the securities based on:

Poodle Corporation was organized on January 3, 2018. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2018, Poodle 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?

Stock dividends cause a reduction in retained earnings, but they never reduce total shareholders' equity.

A small stock dividend is defined as one that is:

On October 15, 2018, a 5% stock dividend was declared and distributed. The fair value of the common stock on this date was $32 per share. Fractional share rights represented 100,000 shares. Cash was paid in lieu of issuing fractional share rights. On the date of declaration and payment, the company had 10 million shares of common stock outstanding. The par of the common shares was $5. Required: Prepare any necessary journal entries to record the above events.

Mike Bradley & Company, a family-owned corporation, declared and distributed a property dividend from its overstocked inventory instead of declaring its usual cash dividend. The inventory's book value exceeded its fair value. The excess is:

During the current year JET Industries issued 5 million of its $1 par common shares to its underwriters for $25,000,000 less promotional and accounting services of $500,000 to effect the issue. Required: Prepare the journal entry to record the issuance of the shares.

What is the difference between a stock split and a stock split effected in the form of a stock dividend?

The statement of shareholders' equity reports the transactions that cause changes in its shareholders' equity account balances. It shows the beginning and ending balances in primary shareholders' equity accounts and any changes that occur during the years reported. Typical reasons for changes include each of the following except:

Lucid Company declared a property dividend of 20,000 shares of $1 par Polk Company common stock. The Polk stock was purchased for $5 per share. The fair value of Polk's stock was $10 per share on the declaration date and $11 per share on the distribution date. What is the amount of the dividend?

Accumulated other comprehensive income:

As of December 31, 2018, Warner Corporation reported the following: During 2019, half of the treasury stock was resold for $240,000; net income was $600,000; cash dividends declared were $1,500,000; and stock dividends declared were $500,000. -What was shareholders' equity as of December 31, 2018?

Share issue costs refer to the costs of obtaining the legal, promotional, and accounting services necessary to effect the sale of shares. The costs reduce the net cash proceeds from selling the shares and thus paid-in capital-excess of par, and are: