•
250 outof250points(100%)
1.
sward:
10 out of
10.00
·····························poinrs ···
July 15
August 15
August 31
Declared a cash dividend payable to common stockholders of $16 5,000.
Date of record is August 15 for th e cash dividend declared on July 15.
Paid the dividend declared on July 15.
Prepare journal entries to record the above transactions for Emerson Corporation. (If no journal entry
is required, select " No journal entry required" in the first account field.)
General Journal
Date
Jul 15
Retained earnings
Common dividend payable
Debit
./
./
Aug 15
No journal entry required
./
Aug 31
Common dividend payable
./
./
1--
Gash
Credit
165,000./
165,000./
165,000./
165,000./
2.
sward:
10 out of
10.00
·····························poinrs ···
Foxburo Company expects to pay a $2.34 per share cash dividend this year on its common stock. The
current market value of Foxburo stock is $32.50 per share.
Compute the expected dividend yield on the Foxburo stock.
Dividend Yield
Choose Numerator:
Choose Denominator:
Annual cash dividends per share
$
./
2.34./
Market value per share
$
Dividend Yield
./
32.50./
Dividend Yield
7.2%
3.
g.vard:
10 out of
10.00
··· · · · · · ·points·
a. Prepare the journal entry to record Zende Company's issuance of 75,000 shares of $5 par value
common stock assuming the shares sell for $5 cash per share.
General Journal
Event
1
Cash
Common Stock, $5 Par Value
Debit
./
Credit
375,000./
./
375,000./
b. Prepare the journal entry to record Zende Company's issuance of 75,000 shares of $5 par value
common stock assuming the shares sell for $6 cash per share.
General Journal
Event
1
Debit
Cash
Common stock, $5 par value
Credit
450,000./
./
375,000./
Paid-in capital in excess of par value, common stock ./
75,000./
4.
8'1Nard:
10 out of
10.00
The stockholders'
price is $40.
e qu i ~/
section of Montel Company's balance sheet follows. The preferred stock's call
Preferred stock- 5% cumulative, $10 par value, 20,000
shares authorized, issued and outstanding
$
Common stock- $5 par value, 200,000 shares
authorized, 150,000 shares issued and outstanding
Retained earnings
To tal stockholders' e q u i ~/
200,000
750,000
900,000
$ 1,850,000
Determine the book value per share of the common stock.
Book Value Per Coomon Share
Choose Numerator:
Choose Denominator:
Book Value Per Conmon Share
I
Stockholders' equity applicable to common shares ./ I
; Number of common shares outstanding
./ =
Book Value Per Common Share
+---->
7.00
$
1,050,000./ I
I$
150,000./ _= ~~
$
5.
award:
10 out of
10.00
The equi ~/ section of Cyril Corporation's balance sheet shows the following.
Preferred stock-{)% cumulative, $25 par value, $30 call price,
10,000 shares issued and outstanding
Common stock- $1O par value, 80,000 shares issued and outstanding
Retained earnings
$
Total stockholders' e qui~/
$ 1,585,000
250,000
800,000
535,000
Determine the book value per share of the preferred and common stock under two separate situations.
1. No preferred dividends are in arrears.
Book Value Per Preferred Share
I
Choose Numerator:
Stockholders' equi~/ applicable to preferred shares
.I
Number of preferred shares outstanding
+--->
300,000J
$
Book Value Per Preferred Share
Choose Denominator:
.I =
10,000J
Book Value Per Conmon Share
Choose Numerator:
.... = ....
.I
~~~~~~~~~~~
Book Value Per Conmon Share
Number of common shares outstanding
1,285,000.,.I
.I =
Sook value per common s11are
=
80,000.I
--'----'~-
......
30.00
$
~~
Choose Denominator:
Stockholders' equity applicable to common shares
$
Sook value per prefe rred share
$
- - - - --
16.06
2. Three years o f preferred dividends are in arrears.
Book Value Per Preferred ~hare
Choose Numerator:
Stockholders' equity applicable to preferred shares
$
.I
-
I
Choose Denominator:
I
Number of preferred shares outstanding
345,000.I I
=
.I' =
10,000.I
Book Value Per Conmon Share
=
Choose Denominator:
~
Choose Numerator:
Stockholders'
$
equi~/
I
applicable to common shares
.II I
1,240,000.Iol I
Number of common shares outstanding .II
80,000.,.Iol
=
Book Value Per Preferred Share
-k.$
=
=
-
Book value per preferred Share
34.50
Book Value Per Conmon Share
Sook value per common share
I
I
$
15.50
6•
sward:
10 out of
10.00
· · · · · · · ·poifits ··· · · · · · · · · · · · · · · · · · · · · · · · · · · · · ··· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·
1. A corporation issued 4,000 shares of $5 par value common stock for $35,000 cash.
Transaction
1
General Journal
Cash
Debit
./
Credit
35,-000./
+--~~~
Common stock. $5 par value
./
20,000./
Paid-in capital in excess of par value, Common stock ./
15,000./
7.
award:
10 out of
10.00
···· · · · · ·poirits · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · .. · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·
2. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their
efforts, estimated to be worth $40,000. The stock has a $ 1 per share stated value.
Transaction
1
GeneHI Journal
Jorganization expenses
Common stock, $1 stated value
Debit
./.,.___4-0-,o_o_o_. ;,
.,/
Paid-in capital in excess of stated value, common stock .,/
Credit
-
2,000.,/
38,000.,/
8.
sward:
10 out of
10.00
........... "' J)OintS' ........................................................ ..
3. A corporation issued 2,000 shares of no-par common stock to its promoters in exchange for their
efforts, estimated to be worth $40,000. The stock has no stated value.
Transaction
1
General Journal
torganization expenses
Common stock, no-par value
Debit
./
./
Credit
40,000./
40,000./
9.
sward:
10 out of
10.00
........................... ·polnrS' ....
4. A corporation issued 1,000 shares of $50 par v alue preferred stock for $60,000 cash.
Transaction
1
General Journal
Cash
Debit
./
Credit
60,000./
--=~_,
Preferred stock, $50 par v alue
./
50,000./
Paid-in capital in excess of par value, preferred stock ./
10,000./
-~~~
10.
award:
10 out of
10.00
Earnings
per Share
$ 12.00
10.00
7.50
50.00
Company
1
2
3
4
Market Value
per Share
$176.40
96.00
93.75
250.00
Compute the price-earnings ratio for each of these four separate companies.
Price-Earai!!lls B!ltio
Company
Choose Numerator:
Market value per share
$
1
J
176.40.I
I
Price-Earn·
Choose Denominator:
Divided
Earnings per share
$
J =
12.00.;
2
96.00yl
10.00.;
3
93 75.I
750.I
4
250.00yl
50.00yl
Which stock might an analyst likely investigate as being potentially undeivalued by the market?
O company
O company
O company
® company
1
2
3
4
=
=
=
=
s Ratio
"""".'"" ""~
14.7
9.6
12.5
5.0
11.
award:
10 out of
10.00
· ··············points ··················································································································································································
Stockholders' equity of Ernst Company consists of 80,000 shares of $5 par value, 8% cumulative
preferred stock and 250,000 shares of $1 par value common stock. Both classes of stock have been
outstanding since the company's inception. Ernst did not dee lare any dividends in the prior year, but it
now declares and pays a $11 0,000 cash dividend at the current year-end.
Determine the amount distributed to each class of stockholders for this two-year-old company.
Par Value per
Dividend per
Calculation of Preferred Dividend:
Preferred
Dividend Rate
Preferred
Share
Share
$
5 00_.I
8%_.I' $
0.40
Total cash dividend
$
11 0,000_.I
To preferred shareholders
64,000_.I
To common shareholders
46,ooo
1
Number of
Preferred
Preferred
Dividend for
two years
Shares
80,000_.I $
64,000_.I
12 •
l'l'Nard:
10outof
10.00
···············pomts ················································ · ·
Of the following statements, which are true for the corporate form of organization? (Select all that
apply .)
a
a
a
a
a
a
a
13
13
13
13
13
13
13
ownership rights cannot be easily transferre<!.
owners have llnlimited liability for oorporate debts.
Capttal is more easily accumulated than with most other forms of organization.
Corporate income tllat is distributed to shareholders is usual~/ taxed tvtice.
It is a separate le-gal entity.
It has a limited life.
owners are not agents of the corporation.
13 .
award:
10outof
10.00
............ '' °j'ioiiits° ..
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a
building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record
issuance of the stock in exchange for the land and building.
General Journal
Event
1
Land
Building
Common stock, $7 par valu·e
Paid-in capital in excess of par value, common stock
Debit
./
./
./
./
Credit
45,000./
85,000./
49,000./
81,000./
14 .
award:
10 out of
10.00
.............. points .................................................................................
Ecker Company reports $2,700,000 of net income for 20 13 and declares $388,020 of cash dividends
on its preferred stock for 20 13. At the end of 20 13, the company had 678,000 weighted-average shares
of common stock.
1. What amount of net income is available to common stockhol ders for 20 13?
Net income
$
2,700,000./
rTo preferred stockholders
388,020./
To common stockholders
.1.
J$__2_,3_1_1_,9_8_o_,
2. What is the company's basic EPS for 20 13?
!!!!sic earni!!llS l!!!f share
I
Choose Numerator:
I
Weighted-average outstanding shares .I =
2,3 11 ,980./ I
678,000./ =
Net income available to common stockholders
$
Choose Denominator:
./j
Basic earnings per share
Basic earnings per share
$
3.41
• P<•• IQuestion # 15 (of25)
•I
no« ~
··············poii'its ·················································································································································
Prepare the issuer's journal entry for each separate transaction.
(a) On March 1, Atlantic Co. issues 42,500 shares of $4 par value common stock for $297,500 cash.
General Journal
Date
Mar. 1
Debit
Common stock, $4 par value
.I
.I
Paid-in captial in excess of par value, common stock
./
Gash
Credit
297,500.I
170,000.I
127,500.I
(b) On April 1, OP Co. issues no-par value common stock for $70,000 cash.
General Journal
Date
Apr. 1
Cash
Debit
""
Common stock, no-par value
-~--
Credit
70,000.I
""
70,000.I
(c) On April 6, MPG issues 2,000 shares of $25 par value common stock for $45,000 of inventory,
$145,000 ofmachiner/, and accepts a $94,00 0 note payable.
General Journal
Date
Apr. 6
Inventory
Machinery
Note payable
Common stock, $25 par value
-
Paid-in captial in excess of par value, common stock
Debit
""
""./
""
45.000.I
145,000.I
Credit
94,000.I
50,000.I
46,000.I
16.
8\llo'ard:
10 out of
10.00
····················poiiits ····················································································· ····················································································································· ··
a. Prepare the journal entry to record Autumn Company's issuance of 63,000 shares of no-par value
common stock assuming the shares sell for $29 cash per share.
Event
-
..
General Journal
Gash
1
Debit
./
Common stock, no-par value
Credit
1,827,000./[
./
1,827,000./
-
b. Prepare the journal entr/ to record Autumn Company's issuance of 63,000 shares of no-par value
common stock assuming tl1e shares are exchanged for land valued at $1,827,000.
Event
1
II
General Journal
Land
Common stock, no-par value
Debit
./
Credit
1,827,000./j
...
<---~--
1,827,000./
17.
sward:
10 out of
10.00
······· points ································
a. Prepare the journal entry to record Tamasin•e Company's issuance of 5,000 shares of $100 par
value 7% cumulative preferred stock for $102 cash per share.
Transaction
1
General Journal
Cash
Debit
./
Preferred stock, $100 par value
Cre dit
510,000./1
./
500,000./
Paid-in capital in excess of par value, preferred stock ./
10,000./
b. Assuming the facts in part 1, if Tamasine declares a year-end cash dividend, what is the amount of
dividend paid to preferred shareholders? (Assume no dividends in arrears.)
Par Value per
Preferred
- -c:ha::.r,,___
$
100.00./
Dividend Rate
7.0%./ $
7.00./
18 •
award:
10 out of
10.00
· ............ ·poiilfs ..........................................................
On May 3, Zirbal Corporation purchased 4,000 shares of its own stock for $36,000 cash. On November
4, Zirbal reissued 850 shares of this treasur1 stock for $8,500.
Prepare t11e May 3 and November 4 journal entries to record Zirbal's purchase and reissuance of
treasury stock.
General Journal
Date
May 03
Treasury stock
Cash
Nov. 4
Cash
Treasur; stock
Paid·in capital, treasur; stock
Debit
./
./
36,000./
./
./
./
8,500./
Credit
36,000./
7,650./
850./
19.
............
sward:
10 out of
10.00
points .......................................................................
Annual Cash Market
Dividend per
Value
per Share
Share
$
16.06 $ 220.00
132.00
13.86
72.00
3.96
80.00
0.96
Company
1
2
3
4
Compute the dividend yield for each of these four separate companies.
Dividend Yield
I
or
./
I
Market value per share
ll!r
Annual cash dividends per share
./ =
1
$
16.06./
l
$
220.00./
2
$
13.86./
I
$
132.00./
3
$
3.96./
I
$
72.00./
4
$
0.96 ./
I
$
80.00./
Which company's stock would probably not be classified as an income stock?
O company
O company
O company
® company
1
2
3
4
=
=
=
=
Dividend yield
7.3%
10.5%
5.5°ro
1.2%
20.
eward:
10 out of
10.00
· ··············pomts ··························································
The following information is available for Amos Company for the year ended December 31, 20 13.
a. Balance of retained earnings, December 31, 2012, prior to discovery of error, $1,375,000.
b. Cash dividends declared and paid during 20 13, $43,000.
c It neglected to record 20 11 depreciation expense of $55,500, which is net of $4,500 in income
· taxes.
d. The company earned $126,000 in 2013 net income.
Prepare a 20 13 statement of retained earnings for Amos Company. (Amounts to be deducted should
be indicated with a minus sign.)
AMOS COMPANY
Statement of Retained Earnings
For Year Ended December 31 , 2013
Retained earnings, December 31, 20 12
Prior period adjustment
./ $
Depreciation expense error in 20 11 (net of tax)
Adjusted retained earnings, December 31, 20 12
./
55,500./
,
- -----'-'-,
./
1,319,500
Add: Net income
./
126,000./
Less: Dividends
./
43,000./
Retained earnings, December 31, 20 13
./=$====1=
,1=50=·=
50=0=: 1
1,375,000./
21.
award:
10 out of
10.00
Epic Company earned net income of $900,000 this year. The number of common shares outstanding
during the entire year was 400,000, and preferred shareholders received a $20,000 cash dividend.
Compute Epic Company's basic earnings per share.
Basic Earninas Per Share
Choose Numerator:
Net income
$
./
900,000./
Choose Denominator:
Preferred dividends
$
./
I
20,000.,il
I
Basic EPS
Weighted·average common shares outstanding ./
=
<---<-400,000.,il =
$
Basic EPS
2.20
per share
22.
""'8ld:
10 out of
10.00
a. Prepare the journal entry to record Jevonte Company's issuance of 36,000 shares of its common
stock assuming the shares have a $2 par value and sell for $18 cash per share.
Event
1
General Journal
Gash
Common stock, $2 par value
Paid-in captial in excess of par value, common stock
Debit
./
Credit
648,000./
./
72,000./
./
576,000./
b. Prepare the journal entry to record Jevonte Company's issuance of 36,000 shares of its common
stock assuming the shares have a $2 stated value and sell for $18 cash per share.
Event
1
General Journal
Cash
Common stock, $2 stated value
----
Paid-in captial in excess of stated value, common stock
Debit
./
Credit
648,000./
./
72,000./
./
576,000./
23 •
award:
10 out of
10.00
··············l>oiiits ······················································ · ··
Compute Topp Company's price-earnings ra tio if its common stock has a market value of $20.54 per
share and its EPS is $3.95.
Price Earninos Ratio
Choose Nwnerator:
Market value per share
$
20.54.,il
Price Earnings Ratio
Choose Denominator:
Earnings per share
I
$
.I =
3.95.,il
=
Price Earnings Ratio
----
5.2
24.
award:
10 out of
10.00
·····························points····
The stockholders' equity section of Jun Comp any's balance sheet as of April 1 follows. On April 2, Jun
declares and distributes a 10% stock dividend. The stock's per share market value on April 2 is $20
(prior to the dividend).
Common stock- $5 par value, 375,000 shares authorized,
200,000 shares issued and outstanding
Paid-in capital in excess of par value, common stock
Retained earnings
$ 1,000,000
600,000
833,000
Total stockholders' e qui~/
$2,433,000
Prepare the stockholders' equity section immediately after the stock dividend.
Jun Company
Stockholders' Equity
April 2 (after stock div idend)
Common stock
./ $
Paid-in capital in excess of par value, common stock ./
Total paid-in capital
Retained earnings
Total stockholders' equity
1.100,000./
900,000./
--------;
2,000,000
./
433,000./
------~
$
2,433,000
------
25 .
award:
10outof
10.00
................... i>oii1ts ...............................................................................................................................................................................................................................................................................................................................
Murray Company reports net income of $770,000 for the year. It has no preferred stock, and its
weighted-average common shares outstanding is 280,000 shares.
Compute its basic earnings per share.
Basic Ea mings Per Share
Choose Numerator:
Net income
$
.I
770,000../
Preferred dividends
$
~~~-~~-
.I
I
---
Choose Denominator:
I
Weighted-average common shares outstanding
0../
~~~-~~-
Basic EPS
.I =
280,000../
=
Basic EPS
$
-~--
2. 75
Iper share