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Exam 13: Accounting for Corporations

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Question 51

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On January 10, a corporation purchased 5,000 of its own ordinary shares at $17.50 per share. On August 4, a total of 1,000 treasury shares were sold at $19.00 per share. These are the only treasury share transactions ever made by the corporation. Prepare the journal entries required on January 10 and August 4.

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Question 52

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The following data were reported by a corporation: The number of outstanding shares is:

A) 12,000.
B) 15,000.
C) 17,000.
D) 20,000.
E) 23,000.

F) C) and D)
G) All of the above

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Question 53

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Changes in accounting estimates are accounted for in current and future periods.

When preference shares are cumulative and the directors either do not declare a dividend to preference shareholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called .

A company reported net income of $850,000 for the current year. The year-end market price per ordinary share was $12 and there were 425,000 weighted-average ordinary shares outstanding. Calculate the company's price-earnings ratio.

A company is authorized to issue 50,000 $50 par, 10%, noncumulative, nonparticipating preference shares and 500,000 no-par ordinary shares. Prepare journal entries to record the following selected transactions that occurred during this year:

Par value per share is the price at which a share is bought or sold.

A company declared a $0.55 per share cash dividend. The company has 200,000 shares authorized, 190,000 shares issued, and 8,000 treasury shares. The journal entry to record the payment of the dividend is:

Dividend payment involves three important dates. They are , , and .

Callable preference shares give its holders the option of exchanging their preference shares into ordinary shares at a specified rate.

A company reported earnings per share of $9.75, paid a $6.00 cash dividend per share to preference shareholders, and paid a $0.54 cash dividend per share to ordinary shareholders. There were 1,000 preference shares outstanding and 6,000 ordinary shares outstanding during the year, and the market price per ordinary share was $45. Calculate the company's dividend yield for the ordinary share.

When no-par share is not assigned a stated value, the total amount received is recorded as Share Capital-Ordinary.

A company has a market value per share of $73.00. Its net income is $1,750,000 and the weighted-average number of shares outstanding is 350,000. The company's price-earnings ratio equals:

Dividend yield shows the annual amount of cash dividends distributed to ordinary shares relative to the share's market price.

The price-earnings (PE) ratio is calculated by dividing by

What are the rights generally granted to ordinary shareholders?

If a corporation is authorized to issue 1,000 $50 ordinary shares, it is said to have $50,000 of shares outstanding.

The following selected transactions took place during the current year for a company: (a) Prepare the journal entries for these transactions. (b) If Retained Earnings had a $75,000 credit balance on January 1, calculate its year-end balance as of December 31.

A company has earnings per share net income of $900,000; its weighted-average ordinary shares outstanding are 180,000. Its dividend per share is $0.45, its market price per share is $88, and its book value per share is $76. Its price-earnings ratio equals:

is the amount of income earned per share of a company's outstanding ordinary shares.