Question 1

On its 2017 balance sheet, Walgreens Boot Alliance, Inc., reports treasury stock at cost of $4,934 million. The company has a total of 1,172,513,618 shares issued and 1,082,986,591 shares outstanding.
What average price did Walgreen pay for treasury shares?
A) $55.15
B) $53.29
C) $53.03
D) $55.11
E) None of the above

Accepted Answer

The answer of On its 2017 balance sheet, Walgreens Boot...

Question 2

The 2017 financial statements of Meadowlark Corporation report that the company paid dividends of $21,825,000 to its preferred shareholders before paying dividends to its common shareholders.
This practice is called:
A) Liquidation preference
B) Treasury preference
C) Dividend preference
D) Stock ownership preference
E) None of the above

Accepted Answer

Dividend preference refers to the priority given to preferred shareholders to receive dividends before common shareholders. This is a common feature of preferred stock, as illustrated by Meadowlark Corporation's practice.

Question 3

Thermopolis, Inc. reported retained earnings of $490,953 on December 31, 2017. During the year, Thermopolis recorded net income of $135,075 and paid dividends of $57,762. The company had no other transactions that affected retained earnings.
What must retained earnings have been on December 31, 2016?
A) $ 57,762
B) $237,250
C) $413,640
D) $478,842
E) None of the above

Accepted Answer

Retained earnings on December 31, 2016, can be calculated by subtracting the net income and adding the dividends to the retained earnings on December 31, 2017. So, $490,953 - $135,075 + $57,762 = $413,640.

Question 4

Riverton, Inc. declares a small stock dividend of 8.0% of the outstanding shares of common stock. Currently, Riverton, Inc. has 1,500,000 shares of $1 par value common stock outstanding. The current market price of the stock is $121.28 per share.
Riverton Partners will record a stock dividend in the amount of:
A) $ 1,300,000
B) $98,540,000
C) $13,613,600
D) $14,553,600
E) None of the above

Accepted Answer

The answer of Riverton, Inc. declares a small stock dividend...

Question 5

DuBois, Inc. announces a large stock dividend of 65% of the 4.96 million outstanding shares of common stock. The current price per share is $13.85. Par value of the stock is $0.01 per share.
What effect does this dividend have on retained earnings?
A) $ 49,600 decrease
B) $ 32,240 decrease
C) $44,652,000 decrease
D) $11,591,288 decrease
E) None of the above

Accepted Answer

The answer of DuBois, Inc. announces a large stock dividend...

Question 6

Which of the following should not be included in accumulated other comprehensive income?
A) Minimum pension liability
B) Currency translation adjustment
C) Gains and losses on derivatives and hedges
D) Unrealized gains and losses on trading securities
E) None of the above

Accepted Answer

Unrealized gains and losses on trading securities are reported in the income statement and affect net income. They are not included in accumulated other comprehensive income, which typically includes items like minimum pension liability adjustments, currency translation adjustments, and gains and losses on derivatives and hedges that are not yet realized.

Question 7

Teton, Inc., reported a net gain of $41,400 on its foreign assets due to the weakening of the U.S. dollar in 2017. In the same year, the company disclosed gains of $958,800 on its derivatives and hedges and a $112,800 unrealized gain on its trading securities. The company also reported a $556,200 loss on the sale of some equipment.
Which of the following best describes the impact of these transactions on Teton, Inc.'s accounts?
A) $1,113,000 increase to net income.
B) $1,000,200 increase to accumulated other comprehensive income.
C) $1,000,200 increase to net income.
D) $ 154,200 increase to accumulated other comprehensive income.
E) None of the above

Accepted Answer

The answer of Teton, Inc., reported a net gain of...

Question 8

Ennis, Inc. has 35,000 common shares issued at a $2.25 par value of which 22,000 are outstanding. If Ennis has no other outstanding stock, what size dividend must be paid such that each share receives $3.20?
A) $96,500
B) $52,500
C) $70,400
D) $44,000
E) None of the above

Accepted Answer

To calculate the total dividend payout, multiply the dividend per share by the number of outstanding shares. Here, $3.20 per share times 22,000 outstanding shares equals $70,400.

Question 9

As of 2017, Buttle Corp. has $10 par, 2% preferred stock, 6,500 shares outstanding, and $1 par common stock with 32,000 shares outstanding. The preferred stock is cumulative and preferred stockholders last received a dividend in 2014.
If the company wants to distribute $4 per share to the common stockholders in 2017, what is the total amount of dividends that the company must pay at the end of the current year?
A) $129,300
B) $128,000
C) $ 3,900
D) $131,900
E) None of the above

Accepted Answer

The company must first pay the preferred stockholders for the years 2015, 2016, and 2017. The annual dividend for preferred stock is 2% of $10 par value, which is $0.20 per share. For 6,500 shares, this is $1,300 per year. For three years, this totals $3,900. Then, the company can pay $4 per share to 32,000 common stockholders, totaling $128,000. The total amount of dividends is $3,900 + $128,000 = $131,900.

Question 10

Which of the following is not a correct statement about noncontrolling interest?
A) Noncontrolling interest is reported as a component of stockholders' equity on the balance sheet.
B) Noncontrolling interest represents their claim to their proportionate share of the net assets and net income of the subsidiary in which they own stock.
C) Noncontrolling interest is a residual claim, like that of any other shareholder.
D) Noncontrolling interests are entitled to preference in dividends and payouts in liquidation.

Accepted Answer

Noncontrolling interests do not typically receive preference in dividends and payouts in liquidation. Instead, they share in the equity and earnings of a subsidiary pro rata, without special preference over the controlling interest.

Question 11

Convertible preferred stock conveys what additional benefit over common stock?
A) Convertible preferred stock has a fixed dividend yield exceeding the return for common stock.
B) Unpaid dividends on convertible preferred stock are never paid before common stock dividends.
C) Convertible preferred stock has a senior claimant position in bankruptcy.
D) Convertible stock can be converted into the company's debt security.
E) All of the above

Accepted Answer

Convertible preferred stock has a senior claimant position in bankruptcy, meaning it is paid out before common stock in the event of liquidation.

Question 12

Oracle Corporation reported the following earnings per share information in its 2016 Form 10-K. The company has only one class of stock outstanding. ($ in millions)
 Basic and diluted earnings per share were, respectively:
A) $0.30 and $0.30
B) $0.77 and $0.74
C) $1.08 and $1.06
D) $2.11 and $2.07
E) None of the above

Accepted Answer

The answer of Oracle Corporation reported the following earnings per...

Question 13

Oil Services Corp. reports the following EPS data in its 2017 annual report (in million except per share data).
 How many weighted average shares were dilutive in 2017?
A) 1,172 million
B) 10 million
C) 14 million
D) 1,186 million
E) None of the above

Accepted Answer

The answer of Oil Services Corp. reports the following EPS...

Question 14

Cisco Systems Inc. reported the following in its income statement for the year ended July 30, 2016: Basic earnings per share of $2.13 and diluted earnings per share of $2.11. There were 5,053 million weighted average basic shares were outstanding during the year.
What approximate net income, did the company report for 2016?
A) $ 7,624 million
B) $10,662 million
C) $10,763 million
D) $ 4,310 million
E) None of the above

Accepted Answer

The answer of Cisco Systems Inc. reported the following in...

Question 15

All of the following are potentially dilutive in computing diluted EPS except:
A) Employee stock options
B) Convertible preferred stock
C) Convertible bonds
D) Warrants
E) All of the above are dilutive securities

Accepted Answer

The answer of All of the following are potentially dilutive...

Question 16

On June 5, 2017, Lewiston, a tile manufacturer, repurchased 2,000 of its $0.75 par value common shares for $22.50 cash per share. On October 5, 2017, Lewiston reissues the 2,000 common shares for $40.50 cash per share.
a. What is the change in the treasury stock account on June 5, 2017?
b. On October 5, does Lewiston recognize a profit from the $18 per share increase in the stock's market value?
c. What is the change in the treasury stock account as a result of the October 5, 2017 transaction?
d. What is the change in the additional paid-in capital account as a result of the October 5, 2017 transaction?

Accepted Answer

The answer of On June 5, 2017, Lewiston, a tile...

Question 17

Following is the stockholders' equity section of the 2017 balance sheet for Waitsburg Company:
  
a. Compute the number of shares issued at May 31, 2017.
b. At what average issue price were the shares issued?
c. At what average cost were the treasury shares purchased?

Accepted Answer

The answer of Following is the stockholders' equity section of...

Question 18

On September 20, 2017, Umatilla Company announced a 4 for 1 stock split. After the split, the company will have about 24.6 million shares outstanding. Shares traded for about $375 a share the day the split was announced.
a. What is a 4 for 1 stock split?
b. Why do companies like Umatilla Company split their stock?
c. How many shares were outstanding when the stock split was announced?
d. How will the equity section of the balance sheet be affected by this stock split?

Accepted Answer

The answer of On September 20, 2017, Umatilla Company announced...

Question 19

On April 15, 2017, Maryhill, Inc. has 275,000 shares of $9 par value common stock issued and outstanding. The balance sheet reports account balances as follows (excerpts only):
Common stock: $2,475,000
Paid in capital in excess of par value: 7,800,000
On June 2, the company splits its stock 3-for-2.
a. How many shares of common stock are issued and outstanding immediately after the stock split? What is the par value of common stock after the split?
b. What is the balance of common stock account immediately after the stock split?
c. What is the balance in paid-in capital (in excess of par value) after the stock split?

Accepted Answer

The answer of On April 15, 2017, Maryhill, Inc. has...

Question 20

On September 1, 2017, Hood River, Inc. announced a 3-for-2 stock split, in the form of a dividend, to be distributed on September 30, 2017, to stockholders of record on September 12, 2017.
a. What is a 3-for-2 stock split?
b. How will Hood River , Inc. balance sheet be affected by this split?

Accepted Answer

The answer of On September 1, 2017, Hood River, Inc....

Quiz 8: Stock Transactions, Dividends, and EPS

On its 2017 balance sheet, Walgreens Boot Alliance, Inc., reports treasury stock at cost of $4,934 million. The company has a total of 1,172,513,618 shares issued and 1,082,986,591 shares outstanding. What average price did Walgreen pay for treasury shares?

The 2017 financial statements of Meadowlark Corporation report that the company paid dividends of $21,825,000 to its preferred shareholders before paying dividends to its common shareholders. This practice is called:

DuBois, Inc. announces a large stock dividend of 65% of the 4.96 million outstanding shares of common stock. The current price per share is $13.85. Par value of the stock is $0.01 per share. What effect does this dividend have on retained earnings?

Which of the following should not be included in accumulated other comprehensive income?

Ennis, Inc. has 35,000 common shares issued at a $2.25 par value of which 22,000 are outstanding. If Ennis has no other outstanding stock, what size dividend must be paid such that each share receives $3.20?

Which of the following is not a correct statement about noncontrolling interest?

Convertible preferred stock conveys what additional benefit over common stock?

Oracle Corporation reported the following earnings per share information in its 2016 Form 10-K. The company has only one class of stock outstanding. ($ in millions) Basic and diluted earnings per share were, respectively:

Oil Services Corp. reports the following EPS data in its 2017 annual report (in million except per share data) . How many weighted average shares were dilutive in 2017?

All of the following are potentially dilutive in computing diluted EPS except: A) Employee stock options B) Convertible preferred stock C) Convertible bonds D) Warrants E) All of the above are dilutive securities

Following is the stockholders' equity section of the 2017 balance sheet for Waitsburg Company: a. Compute the number of shares issued at May 31, 2017. b. At what average issue price were the shares issued? c. At what average cost were the treasury shares purchased?

On September 1, 2017, Hood River, Inc. announced a 3-for-2 stock split, in the form of a dividend, to be distributed on September 30, 2017, to stockholders of record on September 12, 2017. a. What is a 3-for-2 stock split? b. How will Hood River , Inc. balance sheet be affected by this split?