Question 1

A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately

Accepted Answer

A)   $25
B)   $150
C)   $5
D)   $30E) A) and B)
F) All of the above

Question 2

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Accepted Answer

A) True 
 B)False

Question 3

Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would appear as a prior period adjustment?

Accepted Answer

A)   loss resulting from the sale of fixed assets
B)   difference between the actual and estimated uncollectible accounts receivable
C)   error in the computation of depreciation expense in the preceding year
D)   loss from the restructuring of assetsE) A) and B)
F) A) and C)

Question 5

On April 10, Maranda Corporation issued for cash 11,000 shares of no-par common stock at $25. On May 5, Maranda issued at par 1,000 shares of 4%, $50 par preferred stock for cash. On May 25, Maranda issued for cash 15,000 shares of 4%, $50 par preferred stock at $55.​Journalize the entries to record the April 10, May 5, and May 25 transactions.

Accepted Answer

The answer of On April 10, Maranda Corporation issued for...

Question 6

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Accepted Answer

A) True 
 B)False

Question 7

A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

Accepted Answer

A)   $7.00
B)   $112.00
C)   $37.50
D)   $600.00E) C) and D)
F) A) and C)

Question 8

A corporation was organized on January 1 of the current year, with an authorization of 20,000 shares of 4%, $12 par preferred stock, and 100,000 shares of $3 par common stock.The following selected transactions were completed during the first year of operations:Jan. 3Issued 15,000 shares of common stock at $23 per share for cash.31Issued 200 shares of common stock to an attorney in payment of legal fees for organizing the corporation. The value of the stock at the time of payment was $25 per share.Feb. 24Issued 20,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $65,000, $120,000, and $45,000, respectively.Mar. 15Issued 2,000 shares of preferred stock at $56 for cash.​Journalize the transactions.

Accepted Answer

The answer of A corporation was organized on January 1...

Question 9

Assume that retained earnings had a beginning balance of $75,000. Match the following amounts to the appropriate term (a-h) .
-Retained Earnings = Beginning Retained Earnings + Net Income + Ending Retained Earnings - Cash Dividends = $75,000 + $200,000 - $40,000 = $235,000

Accepted Answer

A)  Treasury stock
B)  Retained earnings
C)  Preferred stock
D)  Excess of issue price over par (preferred) 
E)  Common stockF) Total paid-in capitalG) Excess of issue price over par (common) H) Total stockholders' equityI) A) and D)
J) B) and E)

Question 10

Using the following information, prepare the Stockholders' equity section of the balance sheet. Seventy thousand shares of common stock are authorized and 7,000 shares have been reacquired.

Accepted Answer

The answer of Using the following information, prepare the Stockholders'...

Question 11

Which of the following is not a characteristic of a corporation?

Accepted Answer

A)   The financial loss that a stockholder may suffer from owning stock in a public company is limited.
B)   Cash dividends paid by a corporation are deductible as expenses by the corporation.
C)   A corporation can own property in its name.
D)   Corporations are required to file federal income tax returns.E) B) and D)
F) B) and C)

Question 12

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared?

Accepted Answer

A)   $60,000
B)   $20,000
C)   $120,000
D)   $100,000E) B) and D)
F) None of the above

Question 13

Cash dividends are normally paid on shares of treasury stock.

Accepted Answer

A) True 
 B)False

Question 14

One of the main disadvantages of the corporate form is the

Accepted Answer

A)   professional management
B)   double taxation of dividends
C)   charter
D)   requirement to stockE) None of the above
F) B) and C)

Question 15

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 per share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

Accepted Answer

A)   $3,200
B)   $6,400
C)   $4,800
D)   $8,800E) A) and B)
F) All of the above

Question 16

On May 1, 10,000 shares of $10 par common stock were issued at $30, and on May 7, 5,000 shares of $50 par preferred stock were issued at $111. Journalize the entries for May 1 and May 7.

Accepted Answer

The answer of On May 1, 10,000 shares of $10...

Question 17

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:Year 1$10,000Year 245,000Year 390,000​Determine the dividends per share for preferred and common stock for the third year.

Accepted Answer

A)   $4.50 and $0.25
B)   $3.25 and $0.25
C)   $4.50 and $0.90
D)   $2.00 and $0.25E) C) and D)
F) A) and B)

Question 18

Match each of the following stockholders' equity concepts to the appropriate term (a-h) .
-Account used when shares are issued for an amount greater than par value

Accepted Answer

A)  Cash dividend
B)  Date of record
C)  Stock Dividends Distributable
D)  Date of declaration
E)  Treasury stockF) Preferred stockG) Date of paymentH) Paid-In Capital in Excess of ParI) C) and D)
J) B) and E)

Question 19

On January 1, Year 1, a company had the following transactions:​Issued 10,000 shares of $2 par common stock for $12 per share.Issued 3,000 shares of $50 par, 6% cumulative preferred stock for $70 per share.Purchased 1,000 shares of previously issued common stock for $15 per share.​The company had the following dividend information available:​​  Using the following format, fill in the correct values for each year:​

Accepted Answer

The answer of On January 1, Year 1, a company...

Question 20

Match each of the following stockholders' equity concepts to the most appropriate term (a-h) .
-A class of stock having first rights to dividends of a corporation

Accepted Answer

A)  Authorized shares
B)  Issued shares
C)  Outstanding shares
D)  Par value
E)  Common stockF) Preferred stockG) Paid-In Capital in Excess of ParH) Transfer agentI) A) and E)
J) A) and D)

Exam 13: Corporations: Organization, Stock Transactions, and Dividends

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Correct Answer
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The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Correct Answer
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The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared?

Correct Answer
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Which of the following is not a characteristic of a corporation?

Correct Answer
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Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.

Correct Answer
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Which of the following would appear as a prior period adjustment?

Correct Answer
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A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately

Correct Answer
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Correct Answer
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Correct Answer
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Assume that retained earnings had a beginning balance of $75,000. Match the following amounts to the appropriate term (a-h) . -Retained Earnings = Beginning Retained Earnings + Net Income + Ending Retained Earnings - Cash Dividends = $75,000 + $200,000 - $40,000 = $235,000

Correct Answer
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Correct Answer
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Using the following information, prepare the Stockholders' equity section of the balance sheet. Seventy thousand shares of common stock are authorized and 7,000 shares have been reacquired.

Correct Answer
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On May 1, 10,000 shares of $10 par common stock were issued at $30, and on May 7, 5,000 shares of $50 par preferred stock were issued at $111. Journalize the entries for May 1 and May 7.

Correct Answer
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A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

Correct Answer
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Cash dividends are normally paid on shares of treasury stock.

Correct Answer
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One of the main disadvantages of the corporate form is the

Correct Answer
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Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:Year 1$10,000Year 245,000Year 390,000Determine the dividends per share for preferred and common stock for the third year.

Correct Answer
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Match each of the following stockholders' equity concepts to the most appropriate term (a-h) . -A class of stock having first rights to dividends of a corporation

Correct Answer
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Match each of the following stockholders' equity concepts to the appropriate term (a-h) . -Account used when shares are issued for an amount greater than par value

Correct Answer
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Exam 13: Corporations: Organization, Stock Transactions, and Dividends

A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

Correct AnswerverifiedShow Answer

The two main sources of stockholders' equity are investments contributed by stockholders and net income retained in the business.

Correct AnswerverifiedShow Answer

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2-per-share dividend is declared?

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of a corporation?

Correct AnswerverifiedShow Answer

Under the cost method, when treasury stock is purchased by the corporation, the par value and the price at which the stock was originally issued are important.

Correct AnswerverifiedShow Answer

Which of the following would appear as a prior period adjustment?

Correct AnswerverifiedShow Answer

A corporation has 50,000 shares of $25 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 5-for-1 stock split, the market value of the stock after the split will be approximately

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume that retained earnings had a beginning balance of $75,000. Match the following amounts to the appropriate term (a-h) . -Retained Earnings = Beginning Retained Earnings + Net Income + Ending Retained Earnings - Cash Dividends = $75,000 + $200,000 - $40,000 = $235,000

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using the following information, prepare the Stockholders' equity section of the balance sheet. Seventy thousand shares of common stock are authorized and 7,000 shares have been reacquired.

Correct AnswerverifiedShow Answer

On May 1, 10,000 shares of $10 par common stock were issued at $30, and on May 7, 5,000 shares of $50 par preferred stock were issued at $111. Journalize the entries for May 1 and May 7.

Correct AnswerverifiedShow Answer

A corporation has 50,000 shares of $28 par stock outstanding that has a current market value of $150 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately

Correct AnswerverifiedShow Answer

Cash dividends are normally paid on shares of treasury stock.

Correct AnswerverifiedShow Answer

One of the main disadvantages of the corporate form is the

Correct AnswerverifiedShow Answer

Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:Year 1$10,000Year 245,000Year 390,000​Determine the dividends per share for preferred and common stock for the third year.

Correct AnswerverifiedShow Answer

Match each of the following stockholders' equity concepts to the most appropriate term (a-h) . -A class of stock having first rights to dividends of a corporation

Correct AnswerverifiedShow Answer

Match each of the following stockholders' equity concepts to the appropriate term (a-h) . -Account used when shares are issued for an amount greater than par value

Correct AnswerverifiedShow Answer

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Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:Year 1$10,000Year 245,000Year 390,000Determine the dividends per share for preferred and common stock for the third year.

Correct Answer
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Correct Answer
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