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Exam 11: Reporting and Interpreting Stockholders Equity

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Question 71

Multiple Choice

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What would be the title for the common stock account on a balance sheet prepared using International Financial Reporting Standards (IFRS) ?

A) Common shares.
B) Premium shares.
C) Share capital.
D) Capital premium.

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

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Question 72

True/False

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When a company pays its previously declared cash dividend,an investing cash outflow is reported.

A) True
B) False

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Question 73

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The following information is provided for Slickers,Inc.for year 2019: • Preferred stock,7%,$50 par value,1,000 shares issued and outstanding • Common stock,$100 par value,2,000 shares issued and outstanding • Dividends in arrears for 2017 and 2018 • Total dividends declared and paid during 2019 totaled $25,000 - How much of the dividend is paid to the common stockholders during 2019 assuming the preferred stock is cumulative?

Which of the following items is included as part of comprehensive income but is not included as part of net income?

A company declares a 40% large stock dividend when there were 4 million common shares outstanding with a $1 par value.The current market price is $20 per common share.Which of the following will be the effect of the stock dividend?

The board of directors of Atlantic Corp.does is deciding whether to declare and pay a cash dividend or to declare and distribute a stock dividend. Complete the following chart to show the overall effect on each financial statement item for a cash dividend and a stock dividend.Enter the letter "I" if the effect of the dividend is to increase the financial statement item,a letter "D" if the effect of the dividend is to decrease the financial statement item,or a letter "N" if there is no overall effect.(Hint: Think of the journal entries that would be prepared for a cash dividend and a stock dividend.The overall effect is the net effect from declaration to final payment or distribution. )

Which of the following statements incorrectly describes earnings per share (EPS) ?

Wendell Company provided the following pertaining to its accounting year that ended December 31,2019: • Common stock with a $10,000 par value was sold for $50,000 cash • Cash dividends totaling $20,000 were declared,of which $15,000 were paid • Net income was $70,000 • A 5% stock dividend resulted in a common stock distribution,which had a $5,000 par value and a $23,000 market value • Treasury stock repurchased in a prior year for $9,000 was resold for $7,000 and in the journal entry to record the sale,Additional paid-in capital was debited for the amount of the difference between the repurchase price and the resale price - What is the amount of the increase in Wendell's retained earnings for the year ended December 31,2019?

During 2019,Thomas Corporation repurchased some shares of its own common stock.What effect did this transaction have on 2019 stockholders' equity and earnings per share,respectively?

Watson Company has provided the following data about its common stock: • Par value is $1 per share • 10,000,000 authorized shares • 4,300,000 shares are outstanding • 4,700,000 shares are issued How many shares of treasury stock are there?

A company's assets and liabilities both decrease when a previously declared cash dividend is paid.

Katie Company had 40,000 shares of $2 par value common stock outstanding prior to a 40% common stock dividend declaration and distribution.The market value of the common stock on the declaration date was $10.Which of the following statements incorrectly describes the effect of recording the common stock dividend?

At the end of 2019,Washington Corporation reported a $40,000 balance in its common stock account (par value $1 per share).The treasury stock account balance was $720 (cost $6 per share).During 2019,the company declared and paid a cash dividend of $1.50 per share. Calculate the total amount of the 2019 cash dividend.

RKJ Company has provided the following information: • 100,000 shares of $5 par value common stock are authorized • 70,000 shares have been issued • 65,000 shares are outstanding - The 70,000 shares of issued common stock were issued for $9 per share. Which of the following statements is correct?

The following information is provided for Bold Company for the year 2019: • Preferred stock,6%,$50 par value,1,000 shares issued and outstanding • Common stock,$100 par value,2,000 shares issued and outstanding • Dividends in arrears for three prior years (2016-2018) • Total dividends declared and paid in 2019 were $50,000. - How much of the 2019 dividend payment was paid to the common stockholders assuming the preferred stock is noncumulative?

A company repurchased shares of its common stock for $19,000.The stock was initially issued for $12,000 and had a $5,000 par value.Which of the following statements correctly describes the effects of the repurchase of company's common stock shares?

CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December 31,2018.During the year ended December 31,2019,CBA reported net income of $10,000,declared and paid a cash dividend of $2,000,and issued additional common stock for $20,000.What is total stockholders' equity as of December 31,2019?