Question Details

Stockholders' equity of Anamanda Company at September 30



1.	The stockholders' equity of Anamanda Company at September 30, 2010, is presented below:
Common Stock, par value $10, authorized 500,000 shares; 200,000 shares	
 issued and outstanding	$2,000,000
Paid-In Capital in Excess of Par	300,000
Retained Earnings	 1,300,000
	$3,600,000

On October 1, 2010, the Board of Directors of Anamanda declared a 10% stock dividend to be distributed on November 10. The market price of the common stock was $15 on October 1 and $17 on November 10. What is the amount of the charge to retained earnings as a result of the declaration and distribution of this stock dividend?
a.	$0
b.	$200,000
c.	$300,000
d.	$340,000
e.	$750,000


2.	Andromeda Industries had 300,000 shares of common stock with a $3 par value and retained earnings of $180,000. In 2010, earnings per share were $1.80. In 2009, the stock was split 3 for 1. Which of the following would not result from the stock split?
a.	The new shares would total 900,000.
b.	The total amount in the capital stock account would remain the same.
c.	The par value would become $1.
d.	Retained earnings would be reduced.
e.	The earnings per share for 2006 would be restated at $0.60.


	3.	Which of the following is not true about a stock dividend?
a.	With a stock dividend, the firm issues a percentage of outstanding stock as new shares to existing shareholders.
b.	The overall effect of a stock dividend is to leave total stockholders' equity and each owner's share of stockholders' equity unchanged.
c.	In theory, with a stock dividend, total market value considering all outstanding shares should not change.
d.	Since the number of shares changes under a stock dividend, any ratio based on the number of shares must be restated.
e.	The accounting for a stock dividend, assuming the distribution is relatively small, requires that the par value of the stock be removed from retained earnings.


	4.	Which of the following is not a category within accumulated other comprehensive income?
a.	post retirement commitments on health plans
b.	foreign currency translation adjustments
c.	unrealized holding gains and losses on available-for-sale marketable securities
d.	changes to stockholders equity resulting from additional minimum pension liability adjustments
e.	unrealized gains and losses from derivative instruments


	5.	Which of the following is a recurring item?
a.	equity in earnings of nonconsolidated subsidiaries
b.	error of a prior period
c.	discontinued operations
d.	extraordinary gain
e.	cumulative effect of change in accounting principle

	




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