The Jackson Company Has Just Paid a Dividend of $300

The Jackson Company Has Just Paid a Dividend of $300.

16.6 End-of-Affiliate Exercises

Questions

  1. What are the 3 legal forms of business organisation?
  2. How does the number of owners differ among the three forms?
  3. What is the procedure for incorporating a business?
  4. What liability practice stockholders accept for a corporation’southward debts?
  5. Explicate the “double revenue enhancement” concept every bit it applies to corporations.
  6. Define “common stock.”
  7. List three rights usually held by common stockholders.
  8. Define “authorized” number of shares of common stock.
  9. Define “issued” number of shares of common stock.
  10. Ascertain “outstanding” shares of common stock.
  11. Explain the meaning of “par value” of a share of stock.
  12. Why is preferred stock called “preferred”?
  13. What is treasury stock?
  14. Give three reasons a corporation might want to purchase back its ain stock.
  15. What is a dividend?
  16. What is a cumulative dividend?
  17. What is a stock dividend?
  18. What is the divergence in accounting between a pocket-sized stock dividend and a large stock dividend?
  19. Why practise corporations effect stock dividends?
  20. How is return on equity calculated?
  21. How is a company’s cost-earnings ratio calculated?
  22. How is bones earnings per share determined?
  23. Why would a company be required to report diluted earnings per share?

True or Imitation

  1. ____ Sole proprietorships are easier to class than corporations.
  2. ____ Common stockholders are usually permitted to vote for a corporation’s board of directors, but preferred stockholders are non.
  3. ____ Earnings per share is one of the most watched metrics of a corporation.
  4. ____ Preferred dividends must be paid annually.
  5. ____ Partnerships and corporations are both subject to double taxation.
  6. ____ A corporation with stock options had to study diluted earnings per share.
  7. ____ A pocket-size stock dividend will typically result in a smaller debit to retained earnings than a big stock dividend.
  8. ____ It is non possible for a corporation to have more than outstanding shares of stock than authorized shares of stock.
  9. ____ Most companies choose a relatively large par value for their stock.
  10. ____ Preferred stockholder dividends are paid earlier mutual stockholder dividends.
  11. ____ I reason a company might repurchase its own stock is to protect confronting a hostile takeover.
  12. ____ Anyone not a stockholder on the date of declaration of a dividend will non be eligible to participate in that dividend.
  13. ____ When referring to dividends, the term “in arrears” refers to the fact that the date of announcement and the date of payment are not the same.
  14. ____ A company’south price-earnings ratio tin help predict changes in its stock price based on motility in its EPS.
  15. ____ One disadvantage of a sole proprietorship or partnership is the risk of liability by the possessor.

Multiple Choice

  1. Which of the following forms of business organisation is subject to double taxation?

    1. Partnership
    2. Corporation
    3. Sole proprietorship
    4. S corporation
  2. Yancey Corporation issues 50,000 shares of mutual stock for $30 per share. The stock has a par value of $2 per share. By what corporeality would Yancey credit capital letter in excess of par?

    1. $ane,500,000
    2. $1,400,000
    3. $100,000
    4. $50,000
  3. Landon Corporation sold sixteen,000 shares of $0.50 par value common stock for $17 per share. Which of the following is the journal entry Landon should make?

    1. Figure sixteen.12

      Cash (272,000), Common stock (8,000), Capital in excess of par value (264,000)

    2. Figure 16.13

      Cash (272,000), Common stock (272,000)

    3. Figure sixteen.14

      Capital in excess of per value (264,000), Common stock (264,000)

    4. Figure sixteen.15

      Cash (8,000), Common Stock (8,000)

  4. Jackson Visitor is authorized to issue 20,000 shares of $0.50 par value stock. On February one, it problems four,000 shares. On April 20, an boosted half dozen,000 shares are issued. On September 23, Jackson repurchases 2,000 shares. On November 3, it reissues half of the shares it repurchased in September. How many outstanding shares does Jackson accept on December 31?

    1. xx,000
    2. 10,000
    3. ix,000
    4. 8,000
  5. Paul Mitchell purchased a licensing agreement for $40,000 prior to going to piece of work for Traylor Corporation. Traylor agreed to issue two,000 shares of common stock to Mitchell in substitution for his licensing agreement, which at present has a value of $thirty,000. At the time of the stock exchange, Traylor’s $ii par value stock was selling for $14 per share. For what corporeality should Traylor debit the licensing agreement?

    1. $40,000
    2. $thirty,000
    3. $28,000
    4. $4,000
  6. Kramer Visitor is authorized to outcome 45,000 shares of its vii percent, $100 par value preferred stock. On March xv, Kramer problems 5,000 shares for $200 per share. On November 1, Kramer declares the dividend and pays information technology on December 1. What corporeality of cash was paid to the preferred shareholders?

    1. $70,000
    2. $315,000
    3. $630,000
    4. $35,000
  7. Portor Corporation is authorized to sell 150,000 shares of its $0.25 par value mutual stock. Information technology currently has 90,000 shares issued and outstanding. Portor would like to declare a stock dividend and is curious about the effect this will have on retained earnings. Portor’s stock has a current market place value per share of $26. Portor is trying to make up one’s mind between a 5 percent stock dividend and a xl percent stock dividend. Which of the post-obit accurately shows the outcome of each on retained earnings?

    5% Stock Dividend 40% Stock Dividend
    a. $117,000 $936,000
    b. $117,000 $9,000
    c. $1,125 $ix,000
    d. $1,125 $936,000
  8. Falls Church Corporation ended the yr with revenues of $45,000 and expenses of $33,000. Its stockholders’ equity accounts total $490,000. Which of the following is Falls Church’south render on equity for the year?

    1. 9.18%
    2. vi.73%
    3. 73.33%
    4. 2.45%
  9. Fleming Corporation began and ended the yr with l,000 outstanding shares of common stock net income for the year totaled $480,000. Preferred dividends amounted to $30,000. Which of the post-obit would exist Fleming’s basic earnings per share?

    1. $nine.60 per share
    2. $16.00 per share
    3. $6.00 per share
    4. $9.00 per share
  10. Which of the post-obit would not strength a company to compute diluted earnings per share in addition to basic earnings per share?

    1. Convertible preferred stock
    2. Stock warrants
    3. Nonconvertible preferred stock
    4. Stock options
  11. Friar Inc. had a net income for 20X5 of $ane,870,000. It had 600,000 shares of common stock outstanding on 1/i/X5 and repurchased 150,000 of those shares on 8/31/X5. It has no preferred stock. On 12/31/X5, Friar’s stock was selling for $26 per share. Which of the post-obit is Friar’s toll-earnings ratio on 12/31/X5?

    1. 7.65
    2. 8.33
    3. 6.25
    4. 7.00

Problems

  1. Cutlass Corporation is authorized to result 40,000 shares of $1 par value common stock. On March 15, it bug 1,000 shares for $6 per share. Record this transaction for Cutlass.

  2. McNair Corporation is authorized to effect 105,000 shares of v percent, $200 par value preferred stock. On May 22, McNair problems 32,000 shares for $325 per share. McNair declares the preferred dividend on September ane and pays it on October 1.

    1. Record the issuance of the preferred stock.
    2. Record the proclamation of the dividend on September one.
    3. Record the payment of the preferred dividend on October 1.
  3. Douglas Company’southward lath of directors approves a plan to purchase dorsum shares of its common stock. Prepare journal entries for each of the following transactions. Assume that the transactions occur in the order given.

    1. Douglas buys back ii,500 shares of its $one common stock for $35 per share.
    2. Douglas resells 1,000 shares for $36.
    3. Douglas resells 500 shares for $34.
    4. Douglas resells 600 shares for $33.
    5. Douglas resells the remaining 400 shares for $35.
  4. Grayson Corporation is authorized to sell ii,000,000 shares of its $1 par value mutual stock to the public. Earlier 20X7, it had issued threescore,000 shares with a market value of $12 per share. During 20X7, Grishom issued another fourteen,000 shares when the market value per share was $24.

    On ane/1/X7, Grishom had retained earnings of $1,950,000. During 20X7, Grishom earned net income of $80,000 and paid dividends to common stockholders of $19,000. Too during 20X7, Grishom repurchased eleven,000 shares of its own stock when the market price was $22.

    1. Tape the issuance of the common stock during 20X7.
    2. Determine retained earnings on 12/31/X7.
    3. Tape the buy of the treasury stock.
    4. Prepare the stockholders’ disinterestedness section of the residual sheet on 12/31/X7.
  5. In late 20X2, the Pickins Corporation was formed. The articles of incorporation authorize 5,000,000 shares of mutual stock conveying a $1 par value, and 1,000,000 shares of $5 par value preferred stock. On January 1, 20X3, two,000,000 shares of common stock are issued for $xv per share. Also on January i, 500,000 shares of preferred stock are issued at $thirty per share.

    1. Prepare journal entries to tape these transactions on Jan 1.

      During March 20X3, the Pickins Corporation repurchased 100,000 common shares for the treasury at a cost of $xiii per share. During August 20X3, all 100,000 treasury shares are reissued at $16 per share.

    2. Set journal entries to record these transactions.

      During November 20X3, Pickins bug a 25 percent stock dividend on all outstanding shares when its stock was selling for $l per share. On December 1, 20X3, Pickens declares a $0.75 per share cash dividend on mutual stock and a $2.00 per share cash dividend on preferred stock. Payment is scheduled for December 20, 20X3, to shareholders of record on December ten, 20X3.

    3. Fix periodical entries to record the declaration and payment of these stock and greenbacks dividends.
  6. On March 1, St. George Company declares a stock dividend on its $1 par value stock. Information technology had ane,000 shares outstanding and the market value was $13 per share.

    1. What would be the debit to retained earnings for a x percent stock dividend?
    2. What would exist the debit to retained earnings for a thirty per centum stock dividend?
  7. Rawlings Company has the following equity accounts at the beginning and end of 20X3:

    ane/1/X3 12/31/X3
    Preferred Stock, 6%, $100 par value $2,000,000 $two,000,000
    Common Stock, $ane Par Value $160,000 $200,000
    Capital in Excess of Par, Common $12,000,000 $16,000,000
    Retained Earnings $ane,100,000 $ane,800,000

    The additional forty,000 shares of common stock were issued on September 1, 20X3. Preferred stock was paid its dividend during the twelvemonth. Cyberspace income for the year was $1,200,000.

    Make up one’s mind Rawlings’ basic EPS on December 31, 20X3.

  8. Information on Massaff Corporation’south stock accounts follows:

    December 31_______ 20X7 20X8
    Outstanding shares of:
    Mutual stock 300,000 330,000
    Nonconvertible preferred stock 10,000 10,000

    The post-obit boosted data is available:

    • On July 1, 20X8, Massaff sold 30,000 additional shares of common stock.
    • Net income for the year concluded Dec 31, 20X8, was $750,000.
    • During 20X8 Massaff paid dividends of $iii.00 per share on its nonconvertible preferred stock.

    Compute Massaff’s basic earnings per common share for the year ended December 31, 20X8.

  9. In several past capacity, nosotros accept met Heather Miller, who started her own business, Sew Cool. The financial statements for December are shown beneath.

    Effigy 16.16
    Sew together Cool Fiscal Statements

    Sew Cool's Financial Statements

    Figure 16.17

    Sew Cool's Statement of retained earnings

    Figure xvi.18

    Sew Cool's Balance sheet

    Based on the financial statements determine Run up Cool’southward render on equity.

Comprehensive Trouble

This trouble will carry through several chapters, building in difficulty. Information technology allows students to continuously practise skills and cognition learned in previous capacity.

In Affiliate 15 “In Financial Statements, What Information Is Conveyed about Other Noncurrent Liabilities?”, you prepared Webworks statements for March. They are included here as a starting indicate for Apr.

Here are Webworks financial statements as of March 31.

Figure xvi.19
Webworks Financial Statements

Webworks' Income statement

Figure xvi.20

Webworks' Statement of retained earnings

Figure 16.21

Webworks' Balance sheet

The following events occur during Apr:

a. Webworks starts and completes ten more than Web sites and bills clients for $vii,000.

b. Leon invites Nancy to invest money in the business. She contributes $ii,000 and becomes an equal owner with Leon.

c. Webworks purchases supplies worth $125 on account.

d. At the beginning of April, Webworks had xiv keyboards costing $120 each and twenty-eight flash drives costing $23 each. Webworks uses periodic FIFO to cost its inventory.

e. On account, Webworks purchases ninety-five keyboards for $121 each and xc flash drives for $25 each.

f. Webworks sells eighty-seven keyboards for $13,050 and ninety-five of the flash drives for $2,850 cash.

g. Webworks collects $6,400 in accounts receivable.

h. Webworks pays its $500 rent.

i. Webworks pays off $14,000 of its accounts payable.

j. Webworks sells all of its shares of RST stock for $xx per share.

one thousand. Webworks pays Juan $700 for his work during the offset three weeks of April.

50. Webworks writes off an account receivable from Dec in the amount of $150 because collection appears unlikely.

m. Webworks pays off its salaries payable from March.

north. Webworks pays Leon and Nancy a salary of $iii,500 each.

o. Webworks completes the design for the lensman for which it was paid in February. The $300 of the unearned revenue should be reclassified to revenue.

p. Webworks pays Nancy and Leon a dividend of $250 each.

q. Webworks pays taxes of $372 in greenbacks.

Required:

A. Fix journal entries for the to a higher place events.

B. Post the journal entries to T-accounts.

C. Prepare an unadjusted trial balance for Webworks for April.

D. Set adjusting entries for the following and post them to your T-accounts.

r. Webworks owes Juan $100 for his piece of work during the concluding week of April.

s. Webworks receives an electric bill for $440. Webworks will pay the bill in May.

t. Webworks determines that it has $65 worth of supplies remaining at the terminate of April.

u. Webworks is continuing to accrue bad debts at 10 percent of accounts receivable.

v. Webworks continues to depreciate its equipment over five years and its piece of furniture over five years, using the straight-line method.

west. The license agreement should be amortized over its one-year life.

x. QRS Company is selling for $14 per share on April thirty.

y. Interest should be accrued for April.

z. Record cost of goods sold.

E. Set up an adjusted trial balance.

F. Set up fiscal statements for April.

The Jackson Company Has Just Paid a Dividend of $300

Source: https://open.lib.umn.edu/financialaccounting/chapter/16-6-end-of-chapter-exercises/