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Accounting for Stock Options The board of directors of Muir Company adopted a fixed stock option plan to supplement the salaries of certain executives of the company. Options to buy common stock were granted as follows:     Number Exercise Price of Shares...

Performance Based Stock Options Bauil Corporation, a new environmental control company, initiated a performance based stock option plan for its management on January 1, 2007. The plan provided for the granting of a variable number of stock options to management...

Accounting for Stock Transactions Ellis Corporation was organized on June 30,2005. After 2 1/2 years of profitable operations, the equity section of Ellis’s balance sheet was as follows: Contributed capital:   Common stock, $3 par, 600,000 shares authorized,...

Stock Dividend and Cash Dividend On January 1, 2008, Cozumel Company had 100,000 shares of $0.50 par value common stock outstanding. The market value of Cozumel’s common stock was $18 per share. Cozumel’s Retained Earnings balance on January 1 was $460,000. During...

Stockholders’ Equity Transactions Seneca Inc. was organized on January 2, 2007, with authorized capital stock consisting of 50,000 shares of 10%, $200 par value preferred, and 200,000 shares of no par, no statedvalue common. During the first two years of the company’s...

Retained Earnings and the Statement of Cash Flows The following items relate to the activities of Schmidt Company for 2008: (a) Cash dividends declared and paid on common stock during the year totaled $90,000. In addition, on January 15, 2008, dividends of $25,000...

Reporting Stockholders’ Equity The Stockholders’ Equity section of Nilsson Corporation’s balance sheet as of December 31, 2007, is as follows: Common stock ($5 par, 500,000 shares authorized, 275,000 issued and outstanding) $1,375,000   Paid in capital pital in...

Auditing Stockholders’ Equity You have been assigned to the audit of Belcore Inc., a manufacturing company. You have been asked to summarize the transactions for the year ended December 31, 2008, affecting stockholders’ equity and other related accounts. The...

Sample CPA Exam Questions 1. On January 2, 2009, Kine Co. granted Morgan, its president, compensatory stock options to buy 1,000 shares of Kine’s $10 par common stock. The options call for a price of $20 per share and are exercisable beginning on December 31, 2009....