Chapter 11 – Stockholders’ Equity: Paid-In Capital
Financial and Managerial Accounting, 17e 11-7
CHAPTER 11 NAME # __________________
10-MINUTE QUIZ B SECTION
Shown below is information relating to the stockholders’ equity of Revere Corporation at
December 31, 2009
8% cumulative preferred stock, $100 par,
50,000 shares authorized, 15,000 shares issued………………………………….. $1,500,000
Common stock, $5 par, 1,500,000 shares authorized,
1,300,000 shares issued and outstanding …………………………………………… 6,500,000
Additional paid-in capital: preferred stock ……………………………………………. 250,000
Additional paid-in capital: common stock …………………………………………….. 3,750,000
Retained earnings ………………………………………………………………………………. 3,260,000
Each account needs a $ sign.
Answer the following questions based on the stockholders’ equity section given above.
1 Refer to the above data. The average issue price per share of Revere’s preferred stock
was:
a $117. b $100. c $110. d $34.50.
2 Refer to the above data. The total amount of Revere’s paid-in capital at December 31,
2009, is:
a $ 8,000,000.
b $15,260,000.
c $12,000,000.
d $ 4,000,000.
3 Refer to the above data. Revere’s total legal capital at December 31, 2009, is:
a $12,000,000.
b $15,260,000.
c $11,260,000.
d $ 8,000,000.
4 Refer to the above data. The book value per share of common stock, assuming current-
year preferred dividends have been paid, is:
a $9.23. c $8.66.
b $10.39. d $6.15.
5 Refer to the above data. The balance in Retained Earnings at the beginning of the year
was $2,710,000, and there were no dividends in arrears. Net income for 2009 was
$2,250,000. What was the amount of dividend declared on each share of common stock
during 2009?
a $1.30. c $1.21.
b $2.40. d $3.72.
Chapter 11 – Stockholders’ Equity: Paid-In Capital
CHAPTER 11 NAME #
10-MINUTE QUIZ C SECTION
Shown below is information relating to the stockholders’ equity of Novake Corporation at December
31, 2010:
8% cumulative preferred stock, $100 par,
100,000 shares authorized, 7,000 shares issued …………………………………………… $ 700,000
Common stock, $3 par, 1,000,000 shares authorized,
500,000 shares issued and outstanding ………………………………………………………. 1,500,000
Additional paid-in capital: preferred stock …………………………………………………….. 400,000
Additional paid-in capital: common stock …………………………..…………………………. 500,000
Retained earnings ………………………………………………………………………………………… 800,000
From the above information, compute the following:
1 The total amount of legal capital: $__________
2 The total amount of paid-in capital: $__________
3 The average issue price per share of preferred stock: $_____ per share
4 The book value per share of common stock (assume current-year preferred dividends have been paid)
$_____ per share
5 The balance in Retained Earnings at the beginning of the year was $650,000, and there were no
dividends in arrears. Net income for 2010 was $475,000. What was the amount of dividend declared
on each share of common stock during 2010? $_____ per share
Chapter 11 – Stockholders’ Equity: Paid-In Capital
Financial and Managerial Accounting, 17e 11-9
CHAPTER 11 NAME #
10-MINUTE QUIZ D SECTION
1. Shown below is the stockholders’ equity section of Powell’s balance sheet at December 31,
2009:
Stockholders’ equity:
Common stock, $2 par value, 500,000 shares authorized,
?? shares issued ……………………………………………………….………………………… $ 500,000
Additional paid–in capital: common stock …………………………………………………… 1,750,000
Total paid-in capital ……………………………………………………………………………. $2,250,000
Retained earnings ……………………………………………………………………………………… 2,400,000
Total stockholders’ equity …………………………………………………………………………. $4,650,000
In 2010, the following events occurred:
Powell issued 2,500 shares of $2 par common stock as payment for legal services. Although
Powell’s stock is not traded on any exchange, the agreed-upon value of the legal services is
$80,000.
Powell issued 4,500 shares of 6% cumulative preferred stock, $100 par value, for $106 per share.
The board of directors declared a dividend of $1.25 per share on the common stock.
Powell’s net income for 2007 was $675,000.
Instructions
Complete in good form the stockholders’ equity section of a balance sheet prepared for Powell at
December 31, 2010.
Stockholders’ equity:
6% cumulative preferred stock, $100 par value,
10,000 shares authorized, 4,500 shares issued …………………………………….. $
_______
Total paid-in capital ……………………………………………………………………………….. $
_______
Total stockholders’ equity …………………………………………………………………………. $________
Chapter 11 – Stockholders’ Equity: Paid-In Capital
SOLUTIONS TO CHAPTER 11 10-MINUTE QUIZZES
QUIZ A QUIZ B
QUIZ C
1
$700,000 + $1,500,000 = $2,200,000 total legal capital
5
Retained earnings, beginning of year …………………………………………………………………… $ 650,000
Net income ……………………………………………………………………………………………………….. 475,000
Chapter 11 – Stockholders’ Equity: Paid-In Capital
Financial and Managerial Accounting, 17e 11–11
QUIZ D
Stockholders’ equity:
6% cumulative preferred stock, $100 par value,
10,000 shares authorized, 4,500 shares issued ……………………………………………… $ 450,000
Common stock, $2 par value, 500,000 shares
authorized, 252,500 shares issued ………………………………………………………………. 505,000
Chapter 11 – Stockholders’ Equity: Paid-In Capital
Assignment Guide to Chapter 11
Brief
Exercises
Exercises
Problems
Cases
1-10
1-15
1
2
3
4
5
6
7
8
9
1
2
3
4
Time estimate (in minutes)
<15
<15
40
40
25
30
30
30
15
30
50
15
25
30
20
Difficulty rating
E
E
M
M
S
M
M
M
E
M
S
M
S
M
E
Learning Objectives:
1, 2
√
1. Explain the advantages and
disadvantages of organizing a business
as a corporation.
2. Distinguish between publicly owned and
closely held corporations.
1, 2
√
3. Explain the rights of stockholders and
the roles of corporate directors and
officers.
1, 2
√
4. Account for paid-in capital and prepare
the equity section of a corporate balance
sheet.
1, 2, 9, 10
2, 3, 4, 5, 7, 8,
12, 13, 15
√
√
√
√
5. Contrast the features of common stock
with those of preferred stock.
3, 4, 5
2, 3, 4, 5, 6, 8
√
√
√
√
6. Discuss the factors affecting the market
price of preferred stock and common
stock.
2, 5, 6, 8
√
√
7. Explain the significance of book value
and market value of capital stock.
6, 7
2, 5, 7, 8, 15
√
√
√
√
√
8. Explain the purpose and effects of a
stock split.
8, 9
2, 6, 10, 13,
14
√
√
9. Account for treasury stock transactions.
10
2, 9, 11, 14
√
√