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Exam 18: Shareholders Equity Key

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Question 41

Multiple Choice

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Retained earnings represent a company's:

A) Undistributed net income.
B) Undistributed net assets.
C) Extra paid-in capital.
D) Undistributed cash.

E) None of the above
F) A) and B)

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Question 42

Multiple Choice

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What was the average price of the additional treasury shares purchased by Levi during 2013?

A) $11 per share.
B) $12 per share.
C) $12.50 per share.
D) None of the above is correct.

E) A) and D)
F) B) and C)

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Question 43

Multiple Choice

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Paid-in capital in excess of par is reported:

Despot declared a property dividend to give marketable securities to its common stockholders. The securities had cost Despot $7 million and currently have a fair value of $16 million. Which of the following would be included in recording the property dividend declaration?

How many shares of treasury stock were removed for use during 2012, and for what purpose(s)?

Stock designated as preferred usually has preferential rights over other classes of stock relative to dividends and liquidating distributions.

Restrictions on retained earnings must be disclosed in the body of the balance sheet.

Mandatorily redeemable preferred stock is reported as a liability.

The owners of a corporation are its shareholders. If a corporation has only one class of shares, they typically are labeled common shares. Each of the following are ownership rights held by common shareholders, unless specifically withheld by agreement, except:

The shareholders' equity of Green Corporation includes $200,000 of $1 par common stock and $400,000 par value of 6% cumulative preferred stock. The board of directors of Green declared cash dividends of $50,000 in 2013 after paying $20,000 cash dividends in each of 2012 and 2011. What is the amount of dividends common shareholders will receive in 2013?

Roberto Corporation was organized on January 1, 2013. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2013, Roberto had the following transactions relating to shareholders' equity: Issued 10,000 shares of common stock at $7 per share. Issued 20,000 shares of common stock at $8 per share. Reported a net income of $100,000. Paid dividends of $50,000. Purchased 3,000 shares of treasury stock at $10 (part of the 20,000 shares issued at $8) . What is total shareholders' equity at the end of 2013?

Details of each class of stock must be reported:

During its first year of operations, Criswell Inc. completed the following transactions relating to shareholders' equity. January 5: Issued 300,000 of its common shares for $8 per share and 3,000 preferred shares at $110. February 12: Issued 50,000 shares of common stock in exchange for equipment with a known cash price of $310,000. The articles of incorporation authorize 5,000,000 shares with a par value of $1 per share of common and 1,000,000 preferred shares with a par value of $100 per share. Required: Record the above transactions in general journal form.

The net assets of a corporation are equal to:

What ($ in 000s) was shareholders' equity as of December 31, 2013?

When stock is issued for consideration other than cash, what is the measurement objective?

Olsson Corporation received a check from its underwriters for $72 million. This was for the issue of one million of its $5 par stock that the underwriters expect to sell for $72 per share. Which is the correct entry to record the issue of the stock?

On December 31, 2012, Rebel Corporation's balance sheet reported the following. During 2013, Rebel decided to discontinue accounting for share buybacks as treasury shares. Instead, the shares will be treated as having been retired. Required: Prepare the appropriate journal entry to effect this change.

When stock is issued in exchange for property, the best evidence of fair value might be any of the following except:

Retained earnings represent: