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Exam 14: Shareholders Equity

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Question 51

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On 2 January 20X4, GHI Corporation was incorporated in the province of Ontario.It was authorized to issue an unlimited number of no-par value common shares, and 10,000 shares of no-par, $8, cumulative and non-participating preferred.During 20X4, the firm completed the following transactions: Part A: Prepare Journal entries to record the subscription of common shares Part B: Prepare Journal entries to record the issuance of preferred shares in exchange for assets; recorded at fair market value of the assets in the absence of a value for the preferred shares. Part C: Prepare Journal entries to record the receipt of donated assets. Part D: Prepare Journal entries to record the receipt of cash for subscribed shares and issuance of shares. Part E: Prepare Journal entries to record the acquisition and retirement of common shares.Part F: Prepare Journal entries to record dividends declared. Part G: Prepare Journal entries to record the closing of the income summary account.

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Part A: Part B: Pa...

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Question 52

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Ownership of shares usually entitles the holders to all of the following rights except:

A) To elect the board of directors of the corporation.
B) To share in the profits of the corporation.
C) To control the day-to-day operations of the corporation.
D) To purchase new shares when they are offered for sale.

E) A) and D)
F) B) and C)

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Question 53

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When a corporation declares a small stock dividend, it should capitalize the par value of the shares.

YTC sold and issued 200 of its common shares, true no-par, at $12 per share.Assuming no specific legal requirements, the common share account should be credited for:

If a corporation has dividends in arrears on preferred shares, they should also:

Shareholders in a corporation usually have limited liability.

In accounting for dividends, the declaration date is the most important date because dividends are paid to whomever owns the shares on that date.

On December 31, 2013, TTX reported owners' equity of $150,000.During 2014, TTX declared and paid cash dividends of $30,000; reported a net loss of $15,000; issued additional common shares (no par) for $70,000; and purchased treasury stock at a cost of $15,000 (cash) , Therefore, the 2014 ending amount of shareholders' equity was:

RST had the following shareholders and the shares owned by each on November 15: On that date, RST declared a 1 for 2 common stock dividend.The stock was selling for $10 per share.RST issued fractional share rights when necessary.RST had to issue which of the following number of fractional share rights:

Which of the following is NOT a true statement? Treasury stock is:

All unrealized gains and losses, regardless of origin, flow through Other Comprehensive Income.

Propertee, Inc.declared a dividend on May 1 payable in shares of Milly, Inc.(original cost: $4 per share, acquired at the beginning of the current year)to Propertee shareholders of record on June 1.The payment date is July 1.The dividend requires 20,000 shares of Milly to be distributed.Market prices of Milly/share were: May 1: $6; June 1: $8; July 1: $9.Provide the entry at declaration of the dividend.

In a stock split, only the content of contributed capital is changed, whereas in a stock dividend the amount of contributed capital is changed.

As of January 1, 2013 there are 2 years of dividends in arrears on an issue of cumulative nonconvertible preferred shares.No dividends on preferred shares were declared in 2013.Therefore, under IFRS, on the Dec.31, 2013 financial statements, the firm issuing the preferred shares:

Brimley Corp.issued 5,000 common shares, no par, and 800 preferred shares.At the time of issue the common shares were selling at $30 per.There is no current market value for the preferred shares.Total cash received was $162,000.Prepare the journal entry to record the issuance of the shares.

Accounting recognition must be given to common share subscriptions on the subscription date:

Indicate the principle effects of a cash dividend (declared and paid), a stock dividend issued, and a stock split issued, on the financial statements of the issuing corporation.Respond as follows: I-for increase; D-for decrease; and N-no effect.Assume no stock

Dividends may not be paid from share capital without creditor approval.

The number of treasury shares held by a corporation equals:

DWWR purchased its own common shares for $20,000 and debited the treasury stock account for the purchase price.The shares were subsequently sold for $17,000.The $3,000 difference between the cost and sale price should be recorded as a reduction of: