1. ______ Is the Date on Which the Cash Is Disbursed to Pay the Dividend Liability

Chapter 11 - December 1, 2009

1. ______is the date on which the cash is disbursed to pay the dividend liability.

2. ______is the date on which the corporation finalizes its list of current stockholders.

3. ______is the date on which the board of directors officially approves the dividend.

4. ______is a distribution of additional shares of a corporation’s own stock.

5. ______is an increase in the total number of authorized shares by specified ratio.

6. Which reduces retained earnings, a stock split or a stock dividend?

7. What changes the number of shares, a stock split or a stock dividend?

8. What are two types of capital stock?

9. Which feature is not applicable to common stock ownership? a. Right to receive dividends before preferred stock shareholders b. Right to vote on appointment of external auditor c. Right to receive residual assets of the company should it cease operations d. All of the above are applicable to common stock ownership

10. Which of the following statements about stock dividends is true? a. Stock dividends are reported on the income statement b. Stock dividends increase total stockholder’s equity c. Stock dividends decrease total stockholder’s equity d. None of the above

11. To reduce its stock price, Shriver Food Systems, Inc, declared and issued a 50% stock dividend. The company has 800,000 share authorized and 200,000 shares outstanding. The par value of the stock is $1 per share and the market value is $100 per share. Prepare the journal entry to record this large stock dividend.

12. The annual repot of Malibu Beachwear reported the following transactions affecting stockholder’s equity: Prepare journal entries for each of the transactions. a. Purchased $3.5 million in treasury stock

b. Declared and paid cash dividends in the amount of $254.2 million (HINT: Two separate entries)

c. Issued 100 percent common stock dividend involving 222.5 million additional shares with a total par value of $556.3 million.

13. American Laser, Inc, reported the following stockholder’s equity account balances on January 1, 2008.

Common Stock, 10,000 shares of $1 par: $10,000 Additional Paid in Capital-Common: $90,000 Retained earnings: $120,000 Treasury Stock $0

The company entered into the following transactions during 2008. Prepare journal entries for each transaction.

Jan. 15 Issued 5,000 shares of $1 par common stock for $50,000 cash

Feb. 15 Purchased 3,000 shares of $1 par common stock into treasury for $33,000 cash

Mar. 15 Reissued 2,000 share of treasury stock for $24,000 cash

Aug. 15 Reissued 600 shares of treasury stock for $4,600 cash

Sept. 15 Declared (but did not pay) a $1 cash dividend on each outstanding share of common stock. 14.

Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? Issued, of which 500 shares are held as treasury stock) $104,000 Additional Paid-In Capital, preferred $14,300 Common stock (no-par, authorized 20,000 shares, issued and outstanding 8,000 shares) $600,000 Retained earnings $30,000 Cost of 500 shares of Treasury Stock $9,500 Assume that no shares of treasury stock have been sold in the past

A. The number of shares of preferred stock issued was ______. B. The number of shares of preferred stock outstanding was ______. C. The average sale price of the preferred stock when issued was $__ per share. D. The average issue price of the common stock was $_____. E. The treasury stock transaction increased (decreased) stockholder’s equity by ____. F. How much did the treasury stock cost per share? $_____ G. Total stockholder’s equity is $______.