1) in 2012, esther corporation reported net income of $600,000. it declared and paid
preferred stock dividends of $150,000 and common stock dividends of $60,000. during
2012, esther had a weighted average of 200,000 common shares outstanding. compute
esther’s 2012 earnings per share.
a.$1.95
b.$2.25
c.$3.00
d.$3.75
2) what is interest?
a.payment for the use of money
b.an equity investment
c.return on capital
d.loan
3) masterson company has 420,000 shares of $10 par value common stock outstanding.
during the year masterson declared a 10% stock dividend when the market price of the
stock was $36 per share. three months later masterson declared a $.60 per share cash
dividend. as a result of the dividends declared during the year, retained earnings
decreased by
a.$1,789,200
b.$1,512,000
c.$277,200
d.$264,000
4) the major difference between convertible debt and stock warrants is that upon
exercise of the warrants
a.the stock is held by the company for a defined period of time before they are issued to
the warrant holder
b.the holder has to pay a certain amount of cash to obtain the shares
c.the stock involved is restricted and can only be sold by the recipient after a set period
of time
d.no paid-in capital in excess of par can be a part of the transaction
5) spicer corporation has a normal gross profit on installment sales of 30%. a 2011 sale
resulted in a default early in 2013. at the date of default, the balance of the installment
receivable was $40,000, and the repossessed merchandise had a fair value of $22,500.
assuming the repossessed merchandise is to be recorded at fair value, the gain or loss on
repossession should be
a.$0
b.a $5,500 loss
c.a $5,500 gain
d.a $12,500 loss
6) ecker company purchased a new machine on may 1, 2004 for $264,000. at the time
of acquisition, the machine was estimated to have a useful life of ten years and an
estimated salvage value of $12,000. the company has recorded monthly depreciation
using the straight-line method. on march 1, 2013, the machine was sold for $36,000.
what should be the loss recognized from the sale of the machine?
a.$0
b.$5,400
c.$12,000
d.$17,400