Chapter 14, Corporations: Dividends, Retained Earnings, and Income Reporting Video Solutions, Accounting Principles , Tenth Edition

Problem 1

Entries for cash dividends are required on the:
a. declaration date and the payment date.
b. record date and the payment date.
c. declaration date, record date, and payment date.
d. declaration date and the record date.

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Problem 2

Which of the following statements about small stock dividends is true?
a. A debit to Retained Earnings for the par value of the shares issued should be made.
b. A small stock dividend decreases total stockholders equity.
c. Market value per share should be assigned to the dividend shares.
d. A small stock dividend ordinarily will have an effect on par value per share of stock.

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Problem 3

Which of the following statements about a 3-for-1 stock split is true?
a. It will triple the market value of the stock.
b. It will triple the amount of total stockholders' equity.
c. It will have no effect on total stockholders' equity.
d. It requires the company to distribute cash.

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Problem 4

Encore Inc. declared an $$\$ \$ 0,000$$ cash dividend. It currently has 3,000 shares of $$7 \%, \$ 100$$ par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Encore distribute to the common stockholders?
a. $$\$ 38,000$$.
c. $$\$ 59,000$$.
b. $$\$ 42,000$$.
d. None.

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Problem 5

Raptor Inc. has retained earnings of $$\$ 500,000$$ and total stockholders' equity of $$\$ 2,000,000$$. It has 100,000 shares of $$\$ 8$$ par value common stock outstanding. which is currently selling for $$\$ 30$$ per share. If Raptor declares a $$10 \%$$ stock dividend on its common stock:
a. net income will decrease by $$\$ 80,000$$.
b. retained earnings will decrease by $$\$ 80,000$$ and total stockholders' equity will increase by $$\$ \$ 0,000$$.
c. retained carnings will decrease by $$\$ 300,000$$ and total stockholders' equity will increase by $$\$ 300,000$$.
d. retained eamings will decrease by $$\$ 300,000$$ and total paid-in capital will increase by $$\$ 300,000$$.

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Problem 6

Which of the following can cause a restriction in retained carnings?
a. State laws regarding treasury stock.
b. Long-term debt contract terms.
c. Authorizations by the board of directors in light of planned expansion of corporate facilities.
d. All of the above.

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02:01

Problem 7

All but one of the following is reported in a retained earnings statement. The exception is:
a. cash and stock dividends.
b. net income and net loss.
c. sales revenue
d. prior period adjustments.

Oluwadamilola Ameobi

Numerade Educator

Problem 8

A prior period adjustment is:
a. reported in the income statement as a nontypical item.
b. a correction of an error that is recorded directly to retained earnings
c. reported directly in the stockholders' equity section.
d. reported in the retained camings statement as an
adjustment of the ending balance of retained earnings.

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Problem 9

In the stockholders' equity section, Common Stock Dividends Distributable is reported as $a(n):$
a. deduction from total paid-in capital and retained earningx
b. addition to additional paid-in capital.
c. deduction from retained earnings.
d. addition to capital stock.

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Problem 10

Katie Inc. reported net income of $$\$ 186,000$$ during 2012 and paid dividends of $$\$ 26,000$$ on common stock. It also has 10,000 shares of $$6 \%, \$ 100$$ par value, noncumulative preferred stock outstanding. Common stockholders' equity was $$\$ 1,200,000$$ on January 1, 2012, and $$\$ 1,600,000$$ on December 31,2012. The company's return on common stockholders' equity for 2012 is:
a. $$10.0 \%$$
c. $$71 \%$$.
b. $$9.0 \%$$.
d. $$13.3 \%$$.

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Problem 11

Corporation income statements may be the same as the income statements for unincorporated companies except for:
a. gross profit.
c. operating income.
b. income tax expense.
d. net sales.

Oluwadamilola Ameobi

Numerade Educator

01:32

Problem 12

During 2012, Talon Inc. had sales revenue $$\$ 376,000$$, gross profit $$\$ 176,000$$, operating expenses $$\$ 66,000$$, cash dividends $$\$ 30,000$$, other expenses and losses $$\$ 20,000$$. Its corporate tax rate is $30 \%$. What was Talon's income tax expense for the year?
a. $$\$ 18,000$$,
c. $$\$ 112,800$$.
b. $$\$ 52.800$$.
d. $$\$ 27,000$$.

Oluwadamilola Ameobi

Numerade Educator

Problem 13

The return on common stockholders' equity is defined as: a. net income divided by total assets.
b. cash dividends divided by average common stockholders' equity.
c. income available to common stockholders divided by average common stockholders' equity.
d. None of these is correct.

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Problem 14

If everything else is held constant, earnings per share is increased by:
a. the payment of a cash dividend to common shareholders
b. the payment of a cash dividend to preferred shareholders.
c. the issuance of new shares of common stock.
d. the purchase of treasury stock.

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Problem 15

The income statement for Nadeen, Inc, shows income before income taxes $$\$ 700,000$$, income tax expense $$\$ 210,000$$, and net income $$\$ 490,000$$. If Nadeen has 100,000 shares of common stock outstanding throughout the year, earnings per share is:
a. $$\$ 7.00$$.
c. $$\$ 2.10$$.
b. $$\$ 4.90$$.
d. No correct answer is given.

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