ch13-edit - Chapter thirteen Equities Questions 1 What is a...

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Chapter thirteen Equities Questions 1. What is a corporate charter? 2. What are the three important rights of owners of a corporation? 3. What are shareholder resolutions? 4. Name two rights of preferred stockholders. 5. Describe the four features that distinguish debt from equity. 6. Explain why preferred stock is often described as a “hybrid” security. 7. What is meant by redeemable preferred stock? 8. What is meant by cumulative preferred stock? 9. What is a stock warrant? 10. Explain the meaning of the terms authorized, issued, and outstanding as they relate to common stock. 11. Explain why the accounts “unearned compensation ESOP” and “accumulated other comprehensive income” appear in the stockholders’ equity section of the balance sheet. 12. What is treasury stock? 13. Is the purchase of treasury stock like the retirement of shares? Why or why not? 14. Explain why treasury stock is not an asset. 15. How are gains or losses on the sale of treasury stock accounted for? 16. When do dividends become a liability of a corporation? 17. Give the entry to record the declaration of $100 of cash dividends. 18. Give the entry to record the payment of $100 of cash dividends previously declared. 19. What accounting entry would be made to record a 3-for-1 stock split? 20. How does a 3-for-1 stock split affect a company’s income statement and balance sheet? 21. What is a stock dividend?
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22. What effect does a 10% stock dividend have on a company’s income statement and balance sheet? 23. Explain the difference between basic earnings per share and diluted earnings per share. 24. Explain why preferred dividends are deducted from net income in the computation of earnings per share. 25. What is meant by dilution? 26. What are anti-dilutive securities? Exercises E13-1 A note in the Management’s Discussion and Analysis section of the 2000 annual report of the Yankee Candle Company stated: Partnerships affiliated with Forstmann Little & Co. own approximately 63% of the company’s common stock and control the Company. What are the implications of this disclosure to other stockholders and interested investors of Yankee Candle Company? E13-2 Gemminger Corporation reported the following stockholders’ equity section in its balance sheet at December 31, 2000: Gemminger Corporation Stockholders’ Equity December 31, 2000 4% Cumulative preferred stock, $50 par value $1,600,000 Common stock, 400,000 shares authorized, 300,000 shares issued 4,500,000 Additional paid-in capital: common 900,000 Retained earnings 6,800,000 Less: treasury stock at cost, 10,000 common shares (250,000 ) Total Stockholders’ Equity $13,550,000 Required a. Determine the number of shares Gemminger had outstanding at December 31, 2000.
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b. Determine the average issue price of Gemminger’s common stock.
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This note was uploaded on 02/20/2012 for the course ECON 222 taught by Professor Enclair during the Spring '12 term at Guilford Tech.

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ch13-edit - Chapter thirteen Equities Questions 1 What is a...

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