which of the following actions will decrease retained earnings?
D. $4.50, $.50 (Net income - Preferred dividends) / Average common stockholders' equity C Implications for Investors Cash dividends, the most common sort, are taxed at either the normal tax rate or at a reduced rate of 20%, 15%, or 0 . C) increases the number of shares issued B. Increased by $300,000. The board of directors needs to declare the dividend. An entity may distribute a portion of this USD100K to shareholders or keep it there for expanding its operation. Retained Earnings 949,000 If Petra Sales purchases an additional 13,000 shares of treasury stock at $18 per share, what number of shares will be shown as issued and outstanding? Common Stock 57,000 shares x .15 x $6 = $51,300, Sanella Corporation reported the following equity section on its current balance sheet A) Debit Cash Dividends $100,000, and credit Dividends Payable-Common $100,000. Retained Earnings = 60,000 + 10,000 - 2,000 = 68,000. What is the effect of the split? Dividends are a distribution of cash, stock, or other property to stockholders. Decrease No effect. in a partnership, the life of the company is perpetual, but in a corporation, the life of the company is limited to a specific number of years. Stock Dividends and Splits. What amount should Sol credit to additional paidin capital for this stock dividend? B) the accounting is exactly the same as the accounting for par value stock On May 18, year 1, Sol Corp's board of directors declared a 10% stock dividend. Average Price = ($270,000 + $22,000 ) / 2,700 $108, The following information is from the December 31, 2017 balance sheet of Tudor Corporation Income Summary. Since the dividend described in this question is small (< 2025% of the outstanding shares), the journal entry would be When companies set their dividend payout, they generally aim for a rate that is It is important to note that even though the dividend does not distribute yet during the year but the entity had declared the payment to shareholders, then the dividend still needs to accrual and deduct from retained earnings. $0 B ABC announces a stock split of 4-for-1. A) $820,000 The issuance of a stock dividend of 2025% or less requires that the market value of the stock be transferred from retained earnings. A) $770,580 It purchased the stock for $13 per share. Retained Earnings Formula Example. Preferred stockholders receive a dividend preference over common stockholders. This action will Ad impressions and price per ad - In the first quarter of 2023, ad impressions delivered across our Family of Apps increased by 26% year-over-year and the average price per ad decreased by 17% year-over-year. C) passed dividends on cumulative preferred stock B got it correct. A stock split results in an increase or decrease in the number of shares outstanding and a corresponding decrease or increase in the par value per share. A) $1.22 C) The liability must be recorded on the date of record. C A) liabilities remain unchanged Prior to the split, Alto had 10,000 shares of $10 par value common stock issued and outstanding. Godart Co. issued $4,500,000 notes payable as a scrip dividend that matured in five years. At that time, the dividend is the debit to retained earnings and credit to payable to shareholders. B) decreases the number of shares issued stated value. . C) $285,540 $1,150,000 $ 350,000. As of December 31,2017 December 31,2016 Sept. 19 -Received equipment with a market value of $75,000 in exchange for 5,000 shares of the $3 par value common stock -Earned net income of $40,000. B D) passed dividends on common stock, passed dividends on cumulative preferred stock. of shares = $4.50 x 23,000 = $103,500. ($3 per share x 4,000 shares) 12,000 During that year, the corporation sustained a net loss of $40,000. The 2017 balance for Mason Electronics reported the following items with 2016 figures given for comparison 25 Sold 600 shares of the treasury stock for cash of $ 7 per share. Stockholders may receive dividends from corporate earnings. Journalize the transaction. Common Stock-$3 Par Value Cash 240,000 Which of the following would be included in the entry to record the distribution of a 15% stock dividend? On November 1, 2017, McEwing, Inc declared a dividend of $5.00 per share. The stock dividend is a 15% dividend (3,000/20,000). D) The dividend is allocated $235,200 to preferred stockholders and $55,200 to common stockholders. At the time that entity starts its operation, normally it is hard to make a net operating profit. high. Stockholders of a corporation are not personally liable for the corporation's debt. Common stock (22,000 x $16 ) $352,000 A Word. How would the declaration and subsequent issuance of a 10% stock dividend by the issuer affect each of the following when the market value of the shares exceeds the par value of the stock? D) Treasury Stock-Common is debited for $1,650. On November 1, 2017, Pink Rose, Inc. declared a dividend of $3.00 per share. If First declares $180,000 in total dividends for 2017, what amount will be available for its common stockholders? Paid-In Capital in Excess of Par-Common 33 min read. Which of the following is the journal entry needed on November 30, 2017? revenues; paid-in capital. Paidin capital in excess of par (Plug) Therefore, the declaration of a stock dividend will decrease retained earnings. Was reduced to $5. Preferred Stock, $100 par $390,000 Cobb Co. purchased 10,000 shares (2% ownership) of Roe Co. on February 12, year 2. B) The dividend is allocated $152,880 to preferred stockholders and $27,120 to common stockholders. The investors need to approve of the dividend. 115,941. Paid-In Capital from Treasury Stock Transactions 2,000 Supermart, Inc. will report treasury stock beneath retained earnings on the balance sheet as a reduction to total stockholders' equity. Paid-In Capital in Excess of B) par drops to $8.00; total shares stay at 61,000 Retained earnings 2,700 (300 $9) Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect Indigo Inc.'s total assets . par value "Through these actions, we intend to reduce the size of our balance sheet, reduce our reliance on short-term borrowings and address the challenges we continue to face," he said. C Number of Common Shares Outstanding 294,464 195,168 Define treasury stock and provide two reasons why a corporation would purchase treasury stock. Paid-In Capital in Excess of Par-Common 346,000 B : D) Cash is debited for $17,000, Common Stock-$0.05 Par Value is credited for $850, and Paid-In Capital in Excess of Par-Common credited for $16,150. What happens if no-par value stock does not have a stated value? Par-Common ($75,000 - $15,000 ) 60,000. These shares were acquired for $10 per share and sold for $3 per share. common stock of $500,000. net realizable value -Paid-In Capital in Excess of Par-Common: $1,770,000 A B) total stockholders' equity will increase No assets are transferred to stockholders as in the case of a cash or property dividend. D) Treasury Stock- Common is credited for $980. C) $57,857 D Dividends of $22,000 are in arrears. total paid-in capital of $6,300,000. What is the amount of dividend that will be paid for each share of common stock? Wood Co. owns 2,000 shares of Arlo, Inc.'s 20,000 shares of $100 par, 6% cumulative, nonparticipating preferred stock and 1,000 shares (2%) of Arlo's common stock. The assets, total stockholders' equity, and the additional paidin capital accounts of the company are not affected. This answer is correct. earned capital; paid-in capital. D : d. less than 25%. Lack of mutual agency is best described as which of the following? The market value per share immediately after issuance was $15. Form 1120 Schedule M-2: Increases and Decreases. Paid in capital in Excess of Par- Common $214,000 C) $286,000 On November 1, 2017, President, Inc. declared a dividend of $3.00 per share. In addition the investee has not distributed any assets to the investor. Sept. 19 Land 75,000 Explain why you are likely to get lower offers from used-car dealers if they find out that you are moving away soon. C) credit to Cash for $170,000 and a debit to Common Stock-No-Par Value for $170,000 -Earned net income of $37,000. Sale of treasury stock 49,500 D A share repurchase has an obvious effect on a company's income statement, as it reduces outstanding shares, but share repurchases can also . 111,961 . (112,000 - 63,000 ) 49,000, When 1,000 shares of $3 stated value common stock is issued at $18 per share, _____________. B) Treasury Stock- Common is debited for $400,000 A) decreases both assets and liabilities $ 450,000 when a dividend is declared by the board of directors The income summary is a temporary account used to make closing entries. when a dividend is declared by the board of directors, Earth Science- Plate Tectonics and Earthquakes, Orion Chapter 9 Reporting and Analyzing Long-, Orion Ch 8: Reporting and Analyzing Receivabl, Fundamentals of Financial Management, Concise Edition, Daniel F Viele, David H Marshall, Wayne W McManus, International Business Test 2- Roy Philip Ch. B) decreases assets and increase liabilities C Stated value stock is no-par stock that has been assigned an amount similar to par value. Increase Increase, Increase Increase Therefore, one part of stockholders' equity decreases while another part increases. McEwing, Inc has 20,000 shares of common stock outstanding and no preferred stock. B : A 5for1 split in this case would increase the shares outstanding to 50,000 and decrease the par value per share to $2 ($10/5). Retained earnings are what entity left from its operating profits since the beginning of the business until the reporting date. C) Paid-In Capital in Excess of Par-Common is debited for $16,150, and Common Stock-$0.05 Par Value is credited for $16,150. List the net income vertical analysis ratio for each fiscal year presented. Cash (16,000 x 9 ) 144,000 Cash dividend. market price Dividends Payable-Preferred 12,000 D) increases assets and stockholders' equity. C) The dividend is allocated $70,909 to preferred stockholders and $109,091 to common stockholders. In 2015, First Inc. issued 12,000 shares of 8%, $60 par-value preferred stock with a cumulative-dividend feature. The journal entry below summarizes the net effect of the entries to record a stock dividend. Total Liabilities 330,000 284,000 Justin is a stockholder, while Julia is an agent. Corporations pay state income tax, while stockholders pay federal income tax. D Declare a "deficiency dividend" within 90 days of the date of IRS determination that an accumulated earnings tax is owed. Ray Corp. declared a 5% stock dividend on its 10,000 issued and outstanding shares of $2 par value common stock, which had a fair value of $5 per share before the stock dividend was declared. OPERATING INCOME INCREASES 93.3% AND COMPARABLE RESTAURANT SALES INCREASE 10.9% AS MARGINS EXPAND. If stock is issued for assets other than cash, the transaction recorded at the market value of the stock issued or the market of the assets received, whichever is more clearly determinable? Retained Earnings 56,600 In Cobb's income statement for the year ended October 31, year 2, what amount should Cobb report as dividend income? Total Paid in Capital $913,000, Lerner, Inc had the following transactions in 2017, its first year of operations D : Total Assets $571,000 $494,000 A) Common Stock-$6 Par Value would be credited for $51,300. On October 15, 2017, the company declares a total dividend payment of $56,000. No entry was made on the stock dividend declaration date. C) externally generated equity that is acquired from banks and other creditors NEWPORT BEACH, Calif., April 25, 2023 /PRNewswire/ Chipotle Mexican Grill, Inc. today reported financial results for its first quarter ended March 31, 2023. Hadley Corporation issued 200,000 shares of $5 par value common stock for $25 per share. B Was reduced to $2. C) Common Stock-$9 Stated Value for $49,000 At the end of 2017, what is the total amount of paid-in capital? In this case, the dividend is a large stock dividend resulting in a transfer at par value. -Earned net income of $70,000. (Round to two decimal places. The merchandise was delivered FOB shipping point. $3,000. Q: For each action on the right, indicate the effect on Retained earnings (inc4ease, decrease, or no A: Retained earnings means earnings accumulated for the shareholders of the company. On July 1, year 1, Alto Corp. split its common stock 5for1 when the market value was $100 per share. Did not change. Following this transaction, what is the balance of Common Stock? Common stock dividend distributable (par value) B) debit to Cash $4,625 The next day Galahad declared and distributed a 50% stock dividend. dividends; earned capital. No effect Increase Greetings, and welcome to First Republic Bank's First Quarter 2023 Earnings Conference Call. Earnings Per Share = Net Income / Average Number of Common Shares Outstanding Earnings Per Share = $425,500 / 244,816.00 = $1.74 $4,500,000 Most corporations set par value low and issue common stock at a premium. No effect No effect Increase A) decreases assets and increases stockholders equity B : B) assets and liabilities are increased No journal entries are recorded for a stock split. in a partnership, the acts of the owners bind the partnership, but in a corporation, the acts of the owners do not bind the partnership unless they are also an agent of the corporation. 46,207. So, we are expecting 8.3 billion revenue, down by 18.4 billion year-on-year. The entry to record the sale of treasury stock includes a debit to Retained Earnings of $3,150. Which of the following actions CANNOT be used to reduce or Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. The vertical analysis ratio for gross profit, most often referred to as gross margin, is an important measure of how effectively management is controlling its merchandise costs. -Paid no dividends. Preferred Stock-No-Par Value 25,000 A deficit occurs when a company has reoccurring losses and/or dividends in excess of retained earnings. ($10 per share x 400 shares) 4,000 Which of the following is an advantage of the corporate form of business? Mar. Prepare the journal entry for this transaction. Total Stockholders' Equity $4,380,000 $5,132,000 C) 232,000 issued; 173,000 outstanding Both a stock split and a stock dividend will increase total liabilities. Common Stock, $14 Par, 129,000 shares authorized,48,000 shares issued and outstanding $672,000 Jan. 10 2017 Retained Earnings $222,00 This answer is correct. They are both stockholders. B) have first claim on remaining corporate assets after debts are paid The date of record is November 15, and the payment date is November 30, 2017. Retained Earnings 946,000 6. B) the price paid if the corporation purchases its own stock back No effect Decrease B) $7,039,500 Ross Corporation reported the following: Paid in capital in xcess- par $256,000 (Operator Instructions). Treasury Stock- Common is credited for $910. no-par value common stock does not have to be recorded in the corporate charter. Paid-In Capital in Excess of Par-Common (200,000 x .50 x $1). B) $460,000 It indicates that management has a variety of positive NPV projects in its capital budget and would like to finance as many of them as possible with retained earnings. Micro Electronics completed the following stock issuance transactions This answer is correct. Questions 1 and 2 are based on the following information. Cash (7,000 x 16 ) 112,000 The total amount due to the stockholders for the scrip dividend is $4,500,000 + $2,250,000 interest = $6,750,000. A stock split results in a decrease in par value per share and an increase in the number of shares outstanding. C) effects only stockholder's equity accounts The par value of stock is _______________. The preferred stock has a $100 par value, a 5% dividend rate, and is noncumulative. What amount should be paid to the stockholders at the end of the fifth year? b. No effect No effect No effect D) increases both dividends payable and cash, effects only stockholder's equity accounts, When the corporation declares a stock dividend, a stockholder's percentage ownership in the stock of the corporation ________. The decrease in the provision compared to the fourth quarter of 2022 was . $2,250,000 B) The company transfers cash to the brokerage firm on the date of record. C) $981,780 What will be an ideal response, Stock Dividend 100,000 A C) liabilities decrease total paid-in capital of $4,600,000. there is no relationship between par value and market price. D) $24,000, $32,000 B) The dividend per share is $11.56 to preferred stock and $0 per share to common stock. $15,000. (1,500 x 33) of Shares = $270,000 / $100 = 2,700 C) records the dividend payable amount on that date The market value of the stock at that time was $20 per share. total paid-in capital of $475,000. C) stock dividend declared Expert Answer. Today's conference is being recorded. A) $677,000 A) Treasury Stock-Common is debited for $3,300. The account Paid-In Capital from Treasury Stock Transactions has a credit balance of $2,000. Stockholders' equity can decrease in two ways: Dividends are paid out and Retained Earnings is debited and decreases ; Business experiences a loss and Retained Earnings is debited and decreases The following calculation example shows how stockholders' equity can change from the beginning to the end of an accounting period. The balance sheet would be balanced following the entries. Paid-In Capital in Excess of Par-Preferred 25,000 At the end of the current year, the corporation declares a dividend of $208,000. -Issued 2,000 shares of $200 par value preferred stock at par. Retained Earnings 4,790,000 Total equity does not change. Pink Rose, Inc. has 20,000 shares of common stock outstanding and no preferred stock. DALLAS, April 25, 2023 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported first quarter revenue of $4.38 billion, net income of $1.71 billion and earnings per share of $1.85.Earnings per share included a 3-cent benefit for items that were not in the company's original guidance.. When a corporation retires its shares of treasury stock, the stock certificates are canceled. Common stock (31,000 x $20 ) $620,000 Mar. A) cash dividend declared The par value per share decreases with a stock split but has no change with a stock dividend. ($14 x 48,000 x .10) The fair value of Rhud's common stock was $30 per share on May 1, year 1. D) increases the number of shares outstanding, decreases the number of shares outstanding, Assume the following information for Petra Sales, Inc The year-end balance sheet would show June 7 -Issued 4,000 shares of $3 par value common stock for cash of $12 per share Log in Join. outstanding stock. sustainable. D) par goes to $64.00; total shares increase to 244,000, par drops to $4.00; total shares increase to 244,000, Which of the following actions will decrease the amount of Total Stockholders' Equity? A) Cash is debited for $850, and Common Stock-$0.05 Par Value is credited for $850. Which of the following statements is correct in relation to corporate taxation? The calculation of earnings per share is based on the following earnings and number of shares . B) $1,558,140 Bonus Issue: A bonus issue, also known as a scrip issue or a capitalization issue, is an offer of free additional shares to existing shareholders. You selected A : earned capital; paid-in capital. C) is not required by IFRS EARNINGS WEBCAST INFORMATION. C) Common Stock is credited for $294,000. Balance in Retained Earnings = $949,000 - $327,800 = $621,200, On December 1, 2017, Galahad, Inc had 200,000 shares of $1 par value common stock issued and outstanding. The cost of merchandise is a significant cost for all merchandising businesses. $0 The date of record is November 15, and the payment date is November 30, 2017. C) to reward investors Provide the journal entry needed on November 30. B) Stock Dividends would be debited for $95,400. If that is the case, then the retained earnings will reduce by the dividend amounts. of shares outstanding = 186,000 - 13,000 = 173,000 shares, The purchases of treasury stock ________________. 3 Treasury Stock-Common $45.00 B) Stockholders are guaranteed annual dividends. (.8 x $150,000 ) Was reduced to $8. April 2023. The following factors, among others, could cause our actual . Preferred Dividends 0 0 Total Stockholders' Equity $992,000 D) $106, $108 A : D) Stock Dividends would be credited for $51,300. Cash is debited for $850, and Common Stock-$0.05 Par Value is credited for $850. Which of the following actions CANNOT be used to reduce or eliminate a potential accumulated earnings tax liability involving a C corporation owned 100% by a married couple? Paid-In Capital in Excess of Par"Common $262,000 A) The dividend per share is $5.00 to preferred stock and $6.65 per share to common stock. corporations own stock that it has required We set new operational records in the first quarter. D) designating certain amounts of retained earnings for cash dividends that are required to be paid to shareholders, restricting part of retained earnings for expansion or contingencies, Prior period adjustments ________. Suppose the natural rate of unemployment is 666 percent. Preferred Stock, $100 par = $270,000 Dividend paid to the common stockholders = $56,000 - [($100 x 8%) x 3,000] = $32,000, Greg's Grocery, Inc. has 46,000 shares of common stock outstanding and 4,000 shares of preferred stock outstanding. Effective April 27, year 2, the stockholders of Bennett Corporation approved a twoforone split of the company's common stock, and an increase in authorized common shares from 100,000 shares (par value $20 per share) to 200,000 shares (par value $10 per share). Label the point that shows the position of the economy in case. C) Debit Cash Dividends $103,500, and credit Dividends Payable-Common $103,500. 3 Purchased 1,800 shares of the company's $ 3 par value common stock as treasury stock, paying cash of $ 10 per share. B. D) payment date, The entry to record the payment of a previously declared dividend of $0.25 per share on 18,500 shares of common stock includes a ________. This answer is correct. Compute the rate of return on common stockholders' equity for 2016. C. cumulative net income that has not been distributed to stockholders as dividends. The only proper way to eliminate an appropriation of retained earnings after it has served its purpose is to revert to the unappropriated retained earnings C. When treasury shares are purchased, retained earnings must be appropriated equal. Rate of return on common stockholders' equity: -Common Stock, $1.00 par, 232,000 shares issued, 186,000 shares outstanding Mar. Transcribed image text: Which of the following actions will decrease the balance in Retained Earnings? A) repayment of bond principal E. Create and document a business plan to invest retained earnings in a plant expansion. Stock Dividend = 149,000 x $20 x .11 = $327,800 Course Hero is not sponsored or endorsed by any college or university. When performing an audit on entity financial statements, auditors might find some misstatements due to accounting treatments. Mason Electronics A : Retained earnings represent a useful link between the income statement and the balance sheet, as they are recorded under shareholders' equity, which connects the two statements. The payment must be approved by the Board of Directors. At maturity, each shareholder of Godart's three million shares will receive payment of the note principal plus interest. Total stockholders' equity $690,000, Dallkin Corporation issued 10,000 shares of common stock on January 1, 2017. A) issues new shares of stock on that date Oster, Inc. has 23,000 shares of common stock outstanding and no preferred stock. Julia is a stockholder, while Justin is an agent. A) 18 issued; 186,000 outstanding The common stock is $0.10 par value; the preferred stock is 7% noncumulative with a $100.00 par value. Declare a "deficiency dividend" within 90 days of the date of IRS determination that an accumulated earnings tax is owed. of shares = $5.00 x 20,000 = $100,000, Pearland, Inc has 9,000 shares of preferred stock outstanding Total Liabilities and A) decreases the number of shares outstanding Cobb received a stock dividend of 2,000 shares on March 31, year 2, when the carrying amount per share on Roe's books was $35 and the market value per share was $40. A) Stock Dividends is debited for $24,500. D) debit to Dividends Payable for $4,625, debit to Dividends Payable for $4,625 B Prepare the journal entries to record these transactions. D) $888,000, $913,000 C : Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders' equity of $1,200,000. Retained Earnings represents: O A. the amount invested in the entity by the stockholders. D) $1.46, $1.74 On October 15, 2017, the company declares a total dividend payment of $51,000. $18,000 $1,500,000 ($10 per share x 1,800 shares) 18,000 common stock of $125,000. A : The total amount of dividends paid out to preferred stockholders, On the date of record for a dividend, the company ________. B) have more investment risk compared to common stockholders Stockholders' Equity $571,000 $494,000 C there is no relationship between par value and market price. (2,000 x 100 x .5 = 10,000) Logged. A. This answer is correct. Paid-In Capital from Treasury Stock $ 150,000 $ 350,000 A) Debit Dividends Payable-Common $103,500, and credit Retained Earnings $103,500. Assume that Park Place sells 1,500 shares of treasury stock at $33 per share. B An elite private college receives large donations from successful alumni. This is because not many sales are made during the first few years, but the entity normally incurs the large amounts of operating expenses including deprecation, staff, branding, marketing expenses, and other administrative costs. Which of the following is true of dividends? The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period. The stock is actively traded at $9 per share. Clayworks Corporation issued 300,000 shares of $5 par value common stock for $26 per share. Supermart, Inc completed the following treasury stock transactions in 2016 D Peterson, Inc. issued 4,000 shares of preferred stock for $240,000. D) $672,000, $739,200 The declaration and issuance of a stock dividend larger than 40% of the shares previously outstanding. Retained Earnings 500,000 B) internally generated equity that is earned by profitable operations that is not distributed to stockholders A : Corporations usually account for stock dividends by transferring a sum from retained earnings . All temporary accounts must be reset to zero at the end of the accounting period. A corporation has 18,000 shares of 13%, $50 par cumulative preferred stock outstanding and 34,000 shares of no-par common stock outstanding. Common stock (par value) Preferred stock (2,000 x $200 ) $400,000 C) Cash Dividends is credited for $9,000. A few examples of dividends include: 1. Paid in Capital in Excess of Par 150,000 achieving capital gains on the stock purchases, D Common Stock (7,000 x 9 ) 63,000 C : A corporation originally issued $13 par value common stock for $15 per share. Common stock dividend distributable $67,200 What is the average issue price of the preferred stock shares? C) $1.74 at fiscal year-end Outstanding stock represents shares of stock that ________. Refer to the Five-Year Summary of Financial and Operating Results in Appendix B to answer the question below. First quarter highlights, year over year: Explanations are not required.
