shareholder's equity

Question 1

Stock Issuance journal entry

Answer 1

Dr Cash
Cr Common Stock
Cr APIC

Question 2

Stock issuance effect on number of authorizing shares

Answer 2

none

Question 3

Stock issuance effect on number of issued shares

Answer 3

increase

Question 4

Stock issuance effect on number of outstanding shares

Answer 4

increase

Question 5

Purchase of treasury stock journal entry

Answer 5

Dr Treasury Stock
Cr Cash

Question 6

Re-issuance of treasury stock journal entry

Answer 6

Dr Cash
Cr Treasury Stock
Dr/Cr APIC

Question 7

Purchase of treasury stock effect on number of authorizing/issued/outstanding shares

Answer 7

• authorizing: remains the same
• issued: remains the same
• outstanding: decease

Question 8

Re-issuance of treasury stock effect on number of authorizing/issued/outstanding shares

Answer 8

• authorizing: remains the same
• issued: remains the same
• outstanding: increase

Question 9

Stock retirement journal entry

Answer 9

Dr Common Stock
Dr APIC
Dr/Cr Retained Earnings
Cr Cash

Question 10

Stock retirement effect on number of authorizing/issued/outstanding shares

Answer 10

• authorizing: remains the same
• issued: decrease
• outstanding: decease

Question 11

EPS full formula

Answer 11

(Net Income - Net Income Attributed to non-controlling interest -Preferred Dividends) / (Weighted Average number of common stocks outstanding)

Question 12

Return on Equity full formula

Answer 12

(Net Income - N.I. attributed to non-controlling interest - preferred dividends ) / [(beginning total equity - non-controlling interest - preferred stock value) + (ending total equity = non-controlling interest - preferred stock value) / 2]

Question 13

large stock dividend formula

Answer 13

% declared * par value * number of shares outstanding

Question 14

small stock dividend formula

Answer 14

% declared % share price * number of shares outstanding

Question 15

when see the question: how many more shares can be issued

Answer 15

authorized shares - issued shares

Question 16

common stock formula

Answer 16

par value * number of shares

Question 17

APIC formula

Answer 17

(price-par value) * number of shares

Question 18

Why companies purchase treasury stock?

Answer 18

1. offset the dilutive effect due to stop option exercise
2. signal to the market that its stock is cheap and undervalued

Question 19

Difference between common stock and preferred stock?

Answer 19

1. preferred stock:
   - have features like cumulative dividends
   - when the company go bankrupt, preferred stockholders would be paid first than common stockholders