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Exam 3: Equities

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Question 41

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Explain the meaning of "par value," "contributed surplus," and "preferred shares."

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par value shares: Shares with a dollar v...

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Question 42

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In which account would "transactions with owners" be reported?

A) Appropriated reserves.
B) Unappropriated retained earnings.
C) Contributed surplus.
D) Accumulated other comprehensive income.

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Question 43

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Which statement is correct about the "two transaction method" for treasury shares resold for greater than their repurchase cost?

Which is an example of "contributed capital"?

Below are details relating to balances for the equity accounts of Paras Company,and changes to those balances.Note that AOCI is accumulated other comprehensive income. Required: Prepare a statement of changes in equity for the years ended December 31,2017

Assume that a company issued 10,000 shares for $30/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

What is a "stock split"?

Which statement about the "ex-dividend date" is correct?

What is the meaning of "shares authorized," "shares issued," and "shares outstanding"?

Which of the following statements is correct?

Here is an extract of a trial balance for Lipika Inc.Indicate which accounts would be reported under the "retained earnings" section of the balance sheet.

Which of the following statements is correct?

Which statement is correct respecting a company's repurchase of its own shares?

When a corporation engages in a capital transaction (those relating to its contributed capital),the journal entry may involve either a debit or a credit to contributed surplus.While not permitted by accounting standards,if these debits or credits were to be recognized through income,a debit would be called a "loss" and a credit would be called a "gain." Consider the following sequence of transactions: • Jan.1,2012: Company issues 1,500,000 no par common shares at $14 each. • Jan.1,2018: Company reacquires 150,000 common shares in the open market at $9 each,and cancels them immediately. There were no other capital transactions and the company had not paid any dividends. Required: a.Prepare the journal entries for the two transactions. b.Review the journal entry for January 1,2018.How much was credited other than cash? Does this credit reflect good or bad management? As a shareholder,would you be happy or unhappy about this credit entry? c.What would have been the journal entry for January 1,2018 had the repurchase price been $24? d.In the journal entry for part (c),explain why the debit goes to reduce retained earnings.How would a shareholder interpret the reduction in retained earnings?

Which statement about "stock dividends" is correct?

If a company issues 2,000 shares for $55 and then repurchases 50 shares at $55,how much is the contributed capital?

Which statement best describes the accounting when a company cancels its own shares at an amount lower than the average share value?

Cardiff Corporation is a public company traded on a major exchange.Cardiff's common shares are currently trading at $21 per share.The board of directors is debating whether to issue a 200% stock dividend or accomplish a similar result by doing a stock split.The board is wondering how shareholders' equity would be affected,and whether the value of the typical shareholder's investment will change. Details of Cardiff's equity section of the balance sheet are as follows: Required: a.At what price would you expect the shares to trade after either transaction? Explain with calculations. b.Show what the equity section of the balance sheet for Cardiff would look like after the stock dividend or stock split. c.Assume that an investor has 6,000 common shares before the stock dividend or stock split.What would be the value of the investor's holdings before and after the stock dividend or stock split? d.What is your recommendation to the board of directors?

Assume that a company issued 10,000 shares for $30 and a par value of $2/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Nala Company has two classes of shares that were both issued on January 1,2015: Class A,$10 par value,8% preferred shares,2,750,000 shares issued and outstanding; Class B,no par value common shares issued at $30/share,1,300,000 shares issued and outstanding. Due to challenging start-up problems in 2015 and 2016 there were no dividends paid; in 2017 dividends of $8,000,000 were paid; and,for 2018,dividends paid totaled $16,000,000. Required: How much was the amount of dividends paid to preferred and common shares in 2015 to 2018? First assume that the preferred shares are non-cumulative,then assume that they are cumulative. NC = Non-cumulative C = Cumulative P/S = Preferred shares C/S = Common shares