Title: Question 1
QA_Ori: Organization expenses (costs) are incurred in creating a corporation.
Title: Question 2
QA_Ori: Organization expenses (costs) are reported as expenses when incurred
Title: Question 3
QA_Ori: The board of directors of a corporation is responsible for directing the
Title: Question 4
QA_Ori: Authorized shares represent the maximum number of shares that a
Title: Question 5
QA_Ori: The preemptive right of common stockholders is the right to maintain
Title: Question 6
QA_Ori: The general rights of common stockholders include: (1) the right to vote
in stockholders’ meetings, (2) the right to sell or otherwise dispose of stock, (3) the
Title: Question 7
QA_Ori: The market value per share of stock is the price at which a share of
Title: Question 8
QA_Ori: The par value is an arbitrary value placed on a share of stock when it is
Title: Question 9
QA_Ori: Convertible preferred stock is potentially attractive because it offers the
Title: Question 10
QA_Ori: The three important dates governing dividends are:
a. date of declarationthe date the directors vote to pay a dividend.
Title: Question 11
QA_Ori: Cash dividends debited against paid-in capital accounts are called
Title: Question 12
QA_Ori: Declaring a stock dividend has no effect on assets, liabilities, or total
Title: Question 13
QA_Ori: A stock dividend results in a distribution of additional shares to
stockholders and the capitalization of retained earnings. A stock split calls in the old
Title: Question 14
Title: Question 15
Title: Question 16
QA_Ori: Treasury stock purchases affect the corporate assets and stockholders’
Title: Question 17
QA_Ori: With a simple capital structure, earnings per share is calculated by first
Title: Question 18
QA_Ori: A stock option is the right to purchase common stock at a fixed price
Title: Question 19
QA_Ori: When a corporation has no preferred stock, book value per share is
Title: Question 20
QA_Ori: Polaris discloses on its 2011 balance sheet that it has 160,000 common
Title: Question 21
QA_Ori: The par value for Arctic Cat’s common stock is reported to be $0.01. A
Title: Question 22
Title: Quick Study 13-1
QA_Ori:
Title: Quick Study 13-2
QA_Ori:
a. Cash 1,827,000
b. Land 1,827,000
Title: Quick Study 13-3
QA_Ori:
a. Cash 375,000
b.
Cash* 450,000
Title: Quick Study 13-4
QA_Ori:
a.
Cash* 648,000
b. Cash* 648,000
Common Stock, $2 Stated Value** 72,000
Title: Quick Study 13-5
QA_Ori:
(a) Mar.
1
Cash 297,500
Common Stock, $4 Par Value 170,000
(b) Apr.
1
Cash 70,000
(c) Apr.
6
Inventory 45,000
Machinery 145,000
QA_Edit:
Title: Quick Study 13-6
QA_Ori:
1. Cash* 510,000
Quick Study 13-7 (10 minutes)
QA_Ori:
July 15 Retained Earnings 165,000
Aug. 15 No formal journal entry required; company would
Aug. 31 Common Dividend Payable 165,000
Title: Quick Study 13-8
QA_Ori:
Jun Company
Stockholders’ Equity
April 2 (after stock dividend)
Common stock$5 par value, 375,000 shares
Supporting work
Apr. 2 Retained Earnings 400,00
0
Common Stock* 100,000
Paid-In Capital in Excess of Par Value,
$5 par value) = $300,000
Title: Quick Study 13-9
QA_Ori:
Total cash dividend $110,000
Title: Quick Study 13-10
QA_Ori:
May 3 Treasury Stock (4,000 shares) 36,000
Nov. 4 Cash 8,500
Treasury Stock (850 x $9*)7,650
Paid-In Capital, Treasury Stock 850
Title: Quick Study 13-11
QA_Ori:
1. This material error should be reported on the statement of retained earnings
2. This change in the expected useful life is a change in an accounting estimate—
affecting current and future accounting periods. Therefore, the current year
Title: Quick Study 13-12
QA_Ori:
Basic earnings per share: = (Net income – Preferred dividends) / Weighted-average
Title: Quick Study 13-13
QA_Ori:
Basic earnings per share: = (Net income – Preferred dividends) / Weighted-average
Title: Quick Study 13-14
QA_Ori:
5.2
Analysis: Many analysts consider stocks with a PE less than 5 to 8 as potentially
underpriced. This stock with a PE of 5.2 would potentially fall within the underpriced
category. (Instructor note: This is a good point at which to emphasize that PE is based
on expectations—expectations can prove to be higher or lower than actual results.)
Dividend yield = Annual cash dividends per share / Market value per share
Analysis: The company’s dividend yield of 7.2% indicates that it should be classified as
Title: Quick Study 13-16
QA_Ori:
Total stockholders’ equity $1,850,000
Title: Quick Study 13-17
QA_Ori:
Mar. 31 Cash 3,271
Title: Exercise 13-1
QA_Ori:
Characteristic Corporations
1. Owner authority and control One vote per share
2. Ease of formation Requires government approval
Title: Exercise 13-2
QA_Ori:
1.
Feb. 20 Cash 152,000
Common Stock, $2 Par Value* 38,000
2.
Feb. 20 Cash 152,000
3.
Feb. 20 Cash 152,000
Common Stock, $5 Stated Value* 95,000
Title: Exercise 13-3
QA_Ori:
1. Cash 35,000
Common Stock, $5 Par Value* 20,000
2.
Common Stock, $1 Stated Value 2,000
3. Organization Expenses 40,000
4. Cash 60,000
Preferred Stock, $50 Par Value* 50,000
Title: Exercise 13-4
QA_Ori:
Land 45,000
Title: Exercise 13-5
QA_Ori:
Title: Exercise 13-6
QA_Ori:
1.
a. Retained earnings
b. Total stockholders’ equity
Common stock$10 par value, 120,000 shares
c. Number of outstanding shares
2. a. Retained earnings (no change)
Before and after stock split $ 660,000
b. Total stockholders’ equity
Common stock$6.67 (rounded) par value, 180,000 shares
c. Number of outstanding shares
3. From a stockholder’s point of view, there is no practical difference between the