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Exam 10: Stockholders Equity

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Question 1

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All publicly held corporations are regulated by the Securities and Exchange Commission.

A) True
B) False

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Question 2

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Explain why preferred stock often is said to have a mixture of attributes somewhere between common stock and bonds.

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Investors in common stock are the owners...

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Earnings per share (EPS)measures the net income earned per share of common stock outstanding.

When treasury stock is resold at a gain,the difference between its cost and the cash received when resold:

Treasury stock is a contra-equity account since treasury stock increases total stockholders' equity..

We calculate the PE ratio as the stock price divided by earnings per share so that both stock price and earnings are expressed on a per share basis.

The ending Retained Earnings balance of Lambert Inc.increased by $1.5 million from the beginning of the year.The company's net income earned during the year is $3.5 million.What is the amount of dividends Lambert Inc.declared and paid?

Crossroads Mall had 100,000 outstanding shares of common stock.On June 16,2012,Crossroads repurchased 20,000 shares of its own stock at $30 per share.On July 23,2012,Crossroads resold 10,000 shares at $28 per share.What net effect did the repurchase and the resell of common stock have on the accounting equation?

South Beach Apparel issued 10,000 shares of $1 par value stock for $5 per share.What is true about the journal entry to record the issuance?

Which of the following statements about treasury stock transactions is true?

Treasury stock is the repurchase of a company's own issued stock.

The number of shares outstanding is equal to the number of shares issued minus the number of shares bought back.

The statement of stockholders' equity shows

Describe the primary advantages and disadvantages of a corporation in comparison to a sole-proprietorship or partnership.

Hamilton International issues 5,000 shares of its $1 par value common stock to provide funds for further expansion.If the issue price is $15 per share,what is the entry to record the issuance of the stock?

Rugby Rocks,Inc.had a Retained Earnings balance of $12,000 at December 31,2012.The company had an average income of $7,500 over the next 3 years,and an ending Retained Earnings balance of $15,000 at December 31,2013.What was the total amount of dividends paid over the last three years?

Corporations typically do not start raising capital by issuing stock to the general public.What are the common stages of equity financing leading to an initial public offering (IPO)?

The financial statements of Trail Apparel include the following selected data (in millions): 1.Calculate the return on equity for 2013. 2.Calculate the return on the market value of equity for 2013. 3.Calculate the price-earnings ratio for 2013.

No journal entry is made to record a stock split.

Which of the following stages of equity financing comes last in the traditional order of progression?