return on common stockholders’ equity 1. Dillon Corporation splits its common stock 2 for 1, when the market value is $40 per share. Prior to the split, Dillon had 50,000 shares of $10 par value common stock issued and outstanding. After the split, the par value of the stock a. remains the same. b. is reduced to $2 per share. c. is reduced to $5 per share. d. is reduced to $20 per share. 2. Which of the following statements about retained earnings restrictions is incorrect? a. Many states require a corporation to restrict retained earnings for the cost of treasury stock purchased. b. Long-term debt contracts may impose a restriction on retained earnings as a condition for the loan. c. The board of directors of a corporation may voluntarily create retained earnings restrictions for specific purposes. d. Retained earnings restrictions are generally disclosed through a journal entry on the books of a company. 3. Prior period adjustments a. may only increase retained earnings. b. may only decrease retained earnings. c. may either increase or decrease retained earnings. d. do not affect retained earnings. 4. Farmer Company reports the following amounts for 2013: Net income $135,000 Average stockholders’ equity 500,000 Preferred dividends 35,000 Par value preferred stock 100,000 The 2013 rate of return on common stockholders’ equity is a. 25.0%. b. 22.5%. c. 27.0%. d. 33.8%. 5. The return on common stockholders’ equity is computed by dividing a. net income by ending common stockholders’ equity. b. net income by average common stockholders’ equity. c. net income minus preferred dividends by ending common stockholders’ equity. d. net income minus preferred dividends by average common stockholders’ equity. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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