Chapter 12 Quiz and Quick Check – Flashcards
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Which characteristic of a corporation is a disadvantage?
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double taxation
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The two basic sources of corporate capital are
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paid in capital and retained earnings
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Suppose value home and garden imports issued 400,000 shares of .10 par common stock at 4 per share. Which journal entry correctly records the issuance of this stock?
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Cash (400,000 X 4)
common stock - .10 par value (400,000 X .10)
paid in capital in excess of par (the two subtracted)
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Supposed Yummy Treats Bakery issues common stock in exchange for a building. Yummy Treats Bakery should record the building at...
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its market value
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Winston corporation has 9,000 shares of 4%, 10 par cumulative preferred stock and 47,000 shares of common stock outstanding. Winston declared no dividends in 2013. In 2014, Winston declares a total dividend of 54,000. How must of the dividends go to the common stockholders?
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-46,800
Take the OG shares (9000) multiply them by the % and par cumulative.
Take that number and add it to itself
Take the total dividend and subtract it from the number above
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A small stock dividend
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has no effect on total equity
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A company's own stock that it has issued and repurchased is called
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treasury stock
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Assume that a company paid 6 per share to purchase 1100 shares of its 3 par common stock as treasury stock. The purchase of treasury stock
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decreased total equity by 6600
Take the OG paid per share price and multiply it by the purchase shares. This is a decrease because it is a large number PURCHASED as oppose to the stock you already have so you lose money
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Jackson Health Foods has 8000 shares of 2 par common stock outstanding, which was issued at 15 per share. Jackson also has a deficit balance in Retained Earnings of 86000. How much is Jackson's total stockholders equity?
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-34000
Take the issued per share number and multiply it by the amount of shares the store has
Take the retained earnings and make it negative (because its a deficit) and ADD it from the number you got from above
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Dale Corp has the following data
-Net Income 24000
-Preferred Dividends 12000
-Average common stockholders equity 100,000
Dales rate of return on common stockholders equity is
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-12%
-Take Net Income and subtract it from the preferred dividends
-Divide that number from above by the Common Stockholders Equity
