Question 1

Which of the following situations would not be presented in a separate section of the current year's income statement of Hamilton Corporation? (More than one answer may be correct.) During the current year:

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Question 2

The stockholders' equity section of the balance sheet of Xanadu Fashions, Inc., at December 31, 2010 appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company purchased no treasury stock before 2010.
 $\begin{array}{lr}
\text { Stockholders' equity: }\
  \text {   7 \%preferred stock, \$ 100  par, callable at \$ 105 , } &\
 \text { 50,000 shares authorized, 40,000 shares issued  } &\
 \text { Common stock,  \$ 2  par, 600,000 shares authorized,  } &\
 \text {450,000 shares issued, of which 30,000 are held in treasury  } &\
 \text {  Additional paid-in capital:} &\
 \text {From issuance of preferred stock }&640,000\
 \text {From issuance of common stock }&1,890,000\
 \text {From treasury stock transactions }&60,000
 \text {From common stock dividends}&\underline{450,000}\
 \text { Total paid-in capital}&\$7,940,000\
\text {Retained earnings (  \$ 240,000  equal to cost of treasury }\
\text {stock is not avallable for dividends)}&3,600,000\
&\$11,540,000\
\text {Less: Treasury stock (at cost: 30,000 common shares) }&\underline{(240,000)}\
\text {Total stockholders' equity}&\underline{\$11,300,000}
\end{array}$

-Assume all remaining treasury stock is reissued at a price of $24 per share in January of 2011. Prepare the journal entry to record this transaction:

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Question 3

Shown below is information relating to operations of R. Brook, Inc for the current year:
Continuing operations:
In the space provided, complete the income statement for R. Brook, Inc., including earnings per share figures. R. Brook, Inc. has 100,000 shares of a single class of common stock outstanding throughout the year.
R. BROOK, INC.
Condensed Income Statement
For the Year Ended December 31, 2009
 $\begin{array}{lrr}
  \text {  Continuing operations:} &\
 \text { Net sales } &\$2,750,000\
 \text { Costs and expenses (including income taxes) } &2,125,000\
 \text {  Other data:} &\
 \text { Current-year loss generated by segment of the business } &\
 \text {  discontinued in July (net of income tax benefit)} &207,500\
\text { Gain on disposal of discontinued segment (net of  } &\
 \text {income tax)  } &137,500\
 \text { Prior period adjustment (decrease in prior year's depreciation } &\
 \text {  expense, net of income taxes).} &45,000\
 \text { Extraordinary loss (net of income tax benefit) } &17,500\
 \text { Cash dividends declared ( \$ 1.50  per share) } &150,000\
\end{array}$

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Question 4

The stockholders' equity section of the balance sheet of Xanadu Fashions, Inc., at December 31, 2010 appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company purchased no treasury stock before 2010.
 $\begin{array}{lr}
\text { Stockholders' equity: }\
  \text {   7 \%preferred stock, \$ 100  par, callable at \$ 105 , } &\
 \text { 50,000 shares authorized, 40,000 shares issued  } &\
 \text { Common stock,  \$ 2  par, 600,000 shares authorized,  } &\
 \text {450,000 shares issued, of which 30,000 are held in treasury  } &\
 \text {  Additional paid-in capital:} &\
 \text {From issuance of preferred stock }&640,000\
 \text {From issuance of common stock }&1,890,000\
 \text {From treasury stock transactions }&60,000
 \text {From common stock dividends}&\underline{450,000}\
 \text { Total paid-in capital}&\$7,940,000\
\text {Retained earnings (  \$ 240,000  equal to cost of treasury }\
\text {stock is not avallable for dividends)}&3,600,000\
&\$11,540,000\
\text {Less: Treasury stock (at cost: 30,000 common shares) }&\underline{(240,000)}\
\text {Total stockholders' equity}&\underline{\$11,300,000}
\end{array}$

-If Xanadu Fashions had reacquired 35,000 shares of treasury stock early in 2010, compute the price per share for which the reissued treasury stock was sold.

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Question 5

The primary purpose of showing special types of events separately in the income statement is to:

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Showing special types of events separately in the income statement helps users in evaluating the profitability of normal ongoing operations. It separates the unusual gains or losses from the normal business activities, giving a more accurate picture of the company's financial performance. This information is crucial for investors, analysts, and creditors to make informed decisions about the company's future prospects.

Question 6

The stockholders' equity section of the balance sheet of Xanadu Fashions, Inc., at December 31, 2010 appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company purchased no treasury stock before 2010.
 $\begin{array}{lr}
\text { Stockholders' equity: }\
  \text {   7 \%preferred stock, \$ 100  par, callable at \$ 105 , } &\
 \text { 50,000 shares authorized, 40,000 shares issued  } &\
 \text { Common stock,  \$ 2  par, 600,000 shares authorized,  } &\
 \text {450,000 shares issued, of which 30,000 are held in treasury  } &\
 \text {  Additional paid-in capital:} &\
 \text {From issuance of preferred stock }&640,000\
 \text {From issuance of common stock }&1,890,000\
 \text {From treasury stock transactions }&60,000
 \text {From common stock dividends}&\underline{450,000}\
 \text { Total paid-in capital}&\$7,940,000\
\text {Retained earnings (  \$ 240,000  equal to cost of treasury }\
\text {stock is not avallable for dividends)}&3,600,000\
&\$11,540,000\
\text {Less: Treasury stock (at cost: 30,000 common shares) }&\underline{(240,000)}\
\text {Total stockholders' equity}&\underline{\$11,300,000}
\end{array}$

-What was the average issue price per share of preferred stock?

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Question 7

The statement of retained earnings:

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The statement of retained earnings includes prior period adjustments, cash dividends, and stock dividends. It shows changes in the retained earnings balance for the accounting period.

Question 8

The stockholders' equity section of the balance sheet of Xanadu Fashions, Inc., at December 31, 2010 appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company purchased no treasury stock before 2010.
 $\begin{array}{lr}
\text { Stockholders' equity: }\
  \text {   7 \%preferred stock, \$ 100  par, callable at \$ 105 , } &\
 \text { 50,000 shares authorized, 40,000 shares issued  } &\
 \text { Common stock,  \$ 2  par, 600,000 shares authorized,  } &\
 \text {450,000 shares issued, of which 30,000 are held in treasury  } &\
 \text {  Additional paid-in capital:} &\
 \text {From issuance of preferred stock }&640,000\
 \text {From issuance of common stock }&1,890,000\
 \text {From treasury stock transactions }&60,000
 \text {From common stock dividends}&\underline{450,000}\
 \text { Total paid-in capital}&\$7,940,000\
\text {Retained earnings (  \$ 240,000  equal to cost of treasury }\
\text {stock is not avallable for dividends)}&3,600,000\
&\$11,540,000\
\text {Less: Treasury stock (at cost: 30,000 common shares) }&\underline{(240,000)}\
\text {Total stockholders' equity}&\underline{\$11,300,000}
\end{array}$

-How many shares of common stock are outstanding?

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The answer of The stockholders' equity section of the balance...

Question 9

The stockholders' equity section of the balance sheet of Xanadu Fashions, Inc., at December 31, 2010 appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company purchased no treasury stock before 2010.
 $\begin{array}{lr}
\text { Stockholders' equity: }\
  \text {   7 \%preferred stock, \$ 100  par, callable at \$ 105 , } &\
 \text { 50,000 shares authorized, 40,000 shares issued  } &\
 \text { Common stock,  \$ 2  par, 600,000 shares authorized,  } &\
 \text {450,000 shares issued, of which 30,000 are held in treasury  } &\
 \text {  Additional paid-in capital:} &\
 \text {From issuance of preferred stock }&640,000\
 \text {From issuance of common stock }&1,890,000\
 \text {From treasury stock transactions }&60,000
 \text {From common stock dividends}&\underline{450,000}\
 \text { Total paid-in capital}&\$7,940,000\
\text {Retained earnings (  \$ 240,000  equal to cost of treasury }\
\text {stock is not avallable for dividends)}&3,600,000\
&\$11,540,000\
\text {Less: Treasury stock (at cost: 30,000 common shares) }&\underline{(240,000)}\
\text {Total stockholders' equity}&\underline{\$11,300,000}
\end{array}$

-A small stock dividend of 20,000 shares was declared and distributed during 2010. What was the market price per share on the date of declaration?

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Question 10

Which of the following is (are) not true about a stock dividend?

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Question 11

The stockholders' equity section of the balance sheet of Global Publishing at December 31, 2009, appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company had no treasury stock purchases before 2009.
 $\begin{array}{lc}
\text { Stockholders' equity: }\
 \text {  5 \%  preferred stock, \$ 100 par,}\
 \text { 50,000 shares authorized, ?? shares issued}&\$1,200,000\
 \text { Common stock, \$2 par, 500,000 shares authorized,}\
 \text { 140,000 shares issued, of which ?? are held in treasury}&280,000\
 \text { Additional paid-in capital:}\ 
 \text { From  issuance of preferred stock. } & 288,000 \
 \text { From issuance of common stock. } & 840,000 \
 \text { From treasury stock transactions} & 16,000 \
\text { From common stock dividends } & 400,000 \
\text { Total paid-in capital}&\$3,024,000\
\text { Retained earnings ( \$ 112,000 equal to cost of treasury}\
\text { tock is not available for dividends)}&880,000\
&\$3,904,000\
\text { Less: Treasury stock (at cost: 14,000 common shares). }&\underline{(112,000)}\
\text { Total stockholders' equity}&\underline{\$3,792,000}
\end{array}$
-If Global Publishing had reacquired 16,000 shares of treasury stock early in 2009, then some treasury stock must have been sold during 2009 for:

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Question 12

The stockholders' equity section of the balance sheet of Global Publishing at December 31, 2009, appears as follows:
Answer the following questions based on the stockholders' equity section given above. The company had no treasury stock purchases before 2009.
 $\begin{array}{lc}
\text { Stockholders' equity: }\
 \text {  5 \%  preferred stock, \$ 100 par,}\
 \text { 50,000 shares authorized, ?? shares issued}&\$1,200,000\
 \text { Common stock, \$2 par, 500,000 shares authorized,}\
 \text { 140,000 shares issued, of which ?? are held in treasury}&280,000\
 \text { Additional paid-in capital:}\ 
 \text { From  issuance of preferred stock. } & 288,000 \
 \text { From issuance of common stock. } & 840,000 \
 \text { From treasury stock transactions} & 16,000 \
\text { From common stock dividends } & 400,000 \
\text { Total paid-in capital}&\$3,024,000\
\text { Retained earnings ( \$ 112,000 equal to cost of treasury}\
\text { tock is not available for dividends)}&880,000\
&\$3,904,000\
\text { Less: Treasury stock (at cost: 14,000 common shares). }&\underline{(112,000)}\
\text { Total stockholders' equity}&\underline{\$3,792,000}
\end{array}$
-Assume that all remaining treasury stock is reissued at a price of $18 per share in January of 2010. What amount should be credited to the account Additional Paid-in Capital: Treasury Stock Transactions in the journal entry to record this transaction?

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The answer of The stockholders' equity section of the balance...

Question 13

When a corporation has outstanding both common and preferred stock:

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Quiz 12: Income and Changes in Retained Earnings

Which of the following situations would not be presented in a separate section of the current year's income statement of Hamilton Corporation? (More than one answer may be correct.) During the current year:

The primary purpose of showing special types of events separately in the income statement is to:

The statement of retained earnings:

Which of the following is (are) not true about a stock dividend?

When a corporation has outstanding both common and preferred stock: