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Exam 9: Shareholders Equity

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Question 61

True/False

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Stock dividends result in a reduction in the balance of the contributed capital account.

A) True
B) False

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Question 62

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Glow Corporation has 50,000 shares of preferred shares outstanding,with annual dividends paid at the rate of $1.50 per share.Glow also has 100,000 shares of common shares outstanding.If Glow declares a $250,000 dividend in 2013,each outstanding share of common shares would receive:

A) $1.17
B) $1.75
C) $1.50
D) $2.50

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

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Question 63

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Given the following information prepare a Statement of Shareholders' Equity for Q8 Inc for 2017.

Which of the following is a disadvantage of the corporate form of business organization?

Blu corporation issued 1,000 common shares in exchange for a new commercial band saw.At the time of this transaction the shares were trading at $10 and the fair value of the saw was at $12,000.This transaction would be recorded at $10,000.

Redemption value is the amount of owners' equity on the books for each share.

January 1,2017,Assembly System Corporation's Retained Earnings account had a balance of $675,000.During 2017,cash dividends of $25,000 and stock dividends with a market value of $55,000 were declared and distributed.Assembly System Corporation had a net loss of $5,000 in 2017.What is the balance in Retained Earnings that would appear on Assembly System Corporation's statement of shareholders' equity on December 31,2017?

Murray Corporation has gathered the following information for the current year: Required: a.Calculate the return on assets. b.Calculate the return on equity. c.Comment on how these measures are used.

Following is the shareholders' equity section of the balance sheet of the Optimum Corporation: Share capital: Common shares,100,000 shares authorized, The common shares are currently selling for $15.50 per share. The total shareholders' equity after the distribution of a $0.75 per share cash dividend is:

Shareholders are typically more concerned about the market value of the company's shares than about the redemption value of the shares.

When shares are issued,their stated value is set by the board of directors.

Which of the following types of business organizations terminates when its ownership structure changes?

The following statement of shareholders' equity for the Q8 Corporation is missing explanations of the events that led to the changes in the shareholders' equity accounts.Write a brief explanation for each change.

On June 30,2017,Sneeze Limited was authorized to issue 60,000 shares of $5 cumulative preferred shares and 250,000 shares of common shares.During its start-up phase,the company engaged in several transactions. Prepare journal entries for the following transactions:

JetNew has the follow share outstanding since their initial share offering: 50,000 shares of $2.00 cumulative preferred shares 50,000 common shares issued at $15 each The board of directors has declared the following dividends: Prepare a table indicating the split of the declared dividends between the common shareholders and the preferred shareholders for each year.

The declaration of a cash dividend:

All of the following are advantages of the corporate form of business except:

Which of the following is the best measure as to whether a company is successful in using its assets to earn income for the individuals who finance the business?

List several characteristics of a corporation.Indicate,wherever appropriate,if the characteristic is an advantage or a disadvantage of the corporate form of business.