5. Paul Mitchell purchased a licensing agreement for $40,000 prior to going to work for Traylor Corporation. Traylor agreed to issue 2,000 shares of common stock to Mitchell in exchange for his licensing agreement, which now has a value of $30,000. At the time of the stock exchange, Traylors $2 par value stock was selling for $14 per share. For what amount should Traylor debit the licensing agreement?

a. $40,000 b. $30,000 c. $28,000 d. $4,000

6. Kramer Company is authorized to issue 45,000 shares of its 7 percent, $100 par value preferred stock. On March 15, Kramer issues 5,000 shares for $200 per share. On November 1, Kramer declares the dividend and pays it on December 1. What amount of cash was paid to the preferred shareholders?

a. $70,000 b. $315,000 c. $630,000 d. $35,000

7. Portor Corporation is authorized to sell 150,000 shares of its $0.25 par value common stock. It currently has 90,000 shares issued and outstanding. Portor would like to declare a stock dividend and is curious about the effect this will have on retained earnings. Portors stock has a current market value per share of $26. Portor is trying to decide between a 5 percent stock dividend and a 40 percent stock dividend. Which of the following accurately shows the effect of each on retained earnings?

8. Falls Church Corporation ended the year with revenues of $45,000 and expenses of $33,000. Its stockholders equity accounts total $490,000. Which of the following is Falls Churchs return on equity for the year?

a. 9.18% b. 6.73% c. 73.33% d. 2.45%

9. Fleming Corporation began and ended the year with 50,000 outstanding shares of common stock net income for the year totaled $480,000. Preferred dividends amounted to $30,000. Which of the following would be Flemings basic earnings per share?

a. $9.60 per share b. $16.00 per share c. $6.00 per share d. $9.00 per share

10. Which of the following would not force a company to compute diluted earnings per share in addition to basic earnings per share?

a. Convertible preferred stock b. Stock warrants c. Nonconvertible preferred stock d. Stock options

11. Friar Inc. had a net income for 20X5 of $1,870,000. It had 600,000 shares of common stock outstanding on 1/1/X5 and repurchased 150,000 of those shares on 8/31/X5. It has no preferred stock. On 12/31/X5, Friars stock was selling for $26 per share. Which of the following is Friars price earnings ratio on 12/31/X5?

a. 7.65 b. 8.33 c. 6.25 d. 7.00

5% Stock Dividend 40% Stock Dividend a. $117,000 $936,000 b. $117,000 $9,000 C. $1,125 $9,000 d. $1,125 $936,000