Chapter 11: Q3DQ (page 515)
Who is responsible for directing a corporation’s affairs?
The board of directors deals with the various issues of the company.
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Prepare the issuer’s journal entry for each of the following separate transactions.
a. On March 1, Atlantic Co. issues 42,500 shares of \(4 par value common stock for \)297,500 cash.
b. On April 1, OP Co. issues no-par value common stock for \(70,000 cash.
c. On April 6, MPG issues 2,000 shares of \)25 par value common stock for \(45,000 of inventory, \)145,000 of machinery, and acceptance of a $94,000 note payable.
What is the difference between the market value per share and the par value per share.
Compute the price-earnings ratio for each of these four separate companies. Which stock might an analyst likely investigate as being potentially undervalued by the market? Explain.
Company | Earningsper Share | Market Value Per Share |
1 | \( 12.00 | \) 176.40 |
2 | 10.00 | 96.00 |
3 | 7.5 | 93.75 |
4 | 50 | 250.00 |
Courts have ruled that a stock dividend is not taxable income to stockholders. What justifies this decision
Prepare journal entries to record each of the following four separate issuances of stock.
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