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Exam 10: Stockholders Equity

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Question 21

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We compute the return on equity ratio by dividing net income by ending stockholders' equity.

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Question 22

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Fashion,Inc.had a Retained Earnings balance of $12,000 at December 31,2015.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 31,2016.What was the total amount of dividends paid over the last three years?

A) $4,500.
B) $6,500.
C) $19,500.
D) $27,000.

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Question 23

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Indicate whether each of the following transactions increases (+),decreases (−),or has no effect (NE)on total assets,total liabilities,and total stockholders' equity.

Court Casuals has the following beginning balances in its stockholders' equity accounts on January 1,2015: Common Stock,$100,000;Additional Paid-in Capital,$4,100,000;and Retained Earnings,$3,000,000.Net income for the year ended December 31,2015,is $800,000.Court Casuals has the following transactions affecting stockholders' equity in 2015: May 18 Issues 25,000 additional shares of $1 par value common stock for $40 per share. May 31 Repurchases 5,000 shares of treasury stock for $45 per share. July 1 Declares a cash dividend of $1 per share to all stockholders of record on July 15.Hint: Dividends are not paid on treasury stock. July 31 Pays the cash dividend declared on July 1. August 10 Reissues 2,500 shares of treasury stock purchased on May 31 for $48 per share. Taking into consideration all the entries described above,prepare the statement of stockholders' equity for the year ended December 31,2015,using the format provided.

The Retained Earnings balance reported on the balance sheet typically is not affected by:

Financial information for Accessories Unlimited includes the following selected data: What is the company's price-earnings ratio?

Large stock dividends and stock splits are issued primarily to:

On February 22,Brett Corporation reacquired 200 shares of its $5 par value common stock for $25 each.On March 15,the company reissued 70 shares for $30 each.What is true of the entry for reissuing their shares?

Par value is the legal capital per share of stock that's assigned when the corporation is first established.

The balance of Retained Earning at the end of the year represents:

An S Corporation allows a company to enjoy limited liability as a corporation,but tax treatment as a partnership.

Par value has a direct relationship to the market value of the common stock.

Which of the following accounts is not reported in the stockholders' equity section of the balance sheet?

Journal entries to record cash dividends are made on the:

We record treasury stock at the cost of the shares reacquired.

Paid-in Capital is the amount stockholders have invested in the company.

Preferred stock:

Both cash dividends and stock dividends:

When treasury stock is purchased,what is the effect on assets and stockholders' equity?

The amount of retained earnings equals net income minus dividends for the current year.