Learning Qbjestive Ch11-PI A premium on common stock A) Is the amount paid in excess of par by purchasers of newly issued stock B) Is the difference between par value and issue price when the amouns paid is below par C) Represents profit from issuing slock. D) Represents capital gain on sale of stock E) Is prohibited in most states. 55. 56. A company has 40,000 shares of common stock outstanding. The stockholders equity applicable to comimon shbares is 5470,000, and dhe par value per common share is $10. The book valoe per share is: A) 009 B) 1.75. C) $10.00. D) SI1.75. E) $47.50. Leaming Obiective Chl1-A3 d coany so4S in cath dividenda per share. its earningsr share is S4.20 andaket price per share i 5300 e dividend yield equals: A) 160%. B) 629%. C) 8.75% D) 11.40 E) 14.00%. Lcaming Obiective: Chll-PI 58. A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock During the first moech of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would inclade: A debit to Organization Expenses for $3,000. A) B) A debit to Organization Expenses for $5,000. C) A credit to Common Stock for $5,000. D) A credit to Contributed Capital in Excess of Par Value, Common Stock for $5,000. E) A debit to Contributed Capital in Excess of Par Value, Common Stock for $2,000. Leaming Obiective: Chll-PI 39. The Discount on Common Stock account reflects: ference between the par value of stock and its issue price when it is issued at a price below par value B) One share's portion of the issued corporation's net assets recorded in its accounts C) The difference between the par value of the stock and the amount contributed by stockholders when the amount contributed is more than par value D) An amount of assets defined by state law that stockholders must invest and leave invested in a corporation. E) The amount a corporation must pay in additicn to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock. Chll-A4 60. A company has a market value per share of s73.00. Its net income is $1,750,000 and the weighted-average mumber of shares outstanding is 350,000. The company's price-earnings ratio equals: A) 20.9 B) 4.2. C) 14.6. D) 20.0. E) 6.8. Learming Qbiective: Ch11-P2 61. Preferred stock that the issuing corporation at its option may retire by paying a specified amount to the preferred stockholders plus any dividends in arrears is called A) Convertible preferred stock. B) Callable preferred stock. C) Premium stock D) Cumulative preferred stock E) Participating preferred stock. 15