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Exam 12: Corporations: Organization, Stock Transactions, and Dividends

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Question 81

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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?

A) $60,000
B) $20,000
C) $120,000
D) $100,000

E) A) and B)
F) A) and D)

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Question 82

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When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.

A) True
B) False

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Question 83

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The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets, liabilities, or stockholders' equity.

If the dividend amount of preferred stock, $50 par value, is quoted as 8%, then the dividends per share would be $4.

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

The cost method of accounting for the purchase and sale of treasury stock is a commonly used method.

The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

The Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

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.

A disadvantage of the corporate form of business entity is

At December 31, Idaho Company had the following ending account balances: ​ Retained Earnings: $250,000 Preferred Stock ($100 par, 7% cumulative, 10,000 authorized, 5,000 issued and outstanding) : $500,000 Treasury Stock: $40,000 Paid-In Capital in Excess of Par-Common Stock: $625,000 Paid-In Capital in Excess of Par-Preferred Stock: $50,000 Common Stock ($5 par value, 500,000 shares authorized, 105,000 issued) : $525,000 ​ What is the total amount of paid-in capital that would be reported on the statement of stockholders' equity at December 31?

Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded, credit(s) are made to:

Solar Company has 600,000 shares of $75 par common stock outstanding. On February 13, Solar declared a 3% stock dividend to be issued on April 30 to stockholders of record on March 14. The market price of the stock was $90 per share on February 13. ​ Journalize the entries required on February 13, March 14, and April 30.

The par value of stock is an assigned per share amount defined in many states as legal capital.

The stock dividends distributable account is listed in the current liability section of the balance sheet.

On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50 par preferred stock were issued at $104. What are the entries for April 1 and 7?

A company had the following stockholders' equity information available at year-end. ​ - Issued 11,000 shares of $2.00 par value common stock for $12.00 per share. - Issued 5,000 shares of $50 par value 6% preferred stock for $70 per share. - Purchased 1,000 shares of previously issued common stock for $15.00 per share. - Reported net income of $200,000. - Declared and paid the preferred stock dividend. ​ Calculate the earnings per share for the current year.

The Torre Company has the following account balances in stockholders' equity on December 31. ​ $\begin{array}{lr}\text { Common Stock }-\$ 5 \text { par, } 60,000 \text { shares issued } & \$ 300,000 \\\text { Paid-In Capital in Excess of Par-Common Stock } & 600,000 \\\text { Preferred Stock }-\$ 100 \text { par, } 5,000 \text { shares issued } & 500,000 \\\text { Paid-In Capital in Excess of Par-Freferred } & 100,000 \\\text { Retained Earnings } & 200,000 \\\text { Treasury Stock (cost }-\$ 12 \text { per share) } & 60,000\end{array}$ ​ Answer the following questions: ​ 1. How many shares of treasury stock are owned? ​ 2. What was the average market price per share at which common stock was issued? ​ 3. What was the average market price per share at which preferred stock was issued? ​ 4. What is the total value of the paid-in capital portion of stockholders' equity? ​ 5. What is the total value of stockholders' equity? ​ 6. How many shares of common stock are outstanding? ​ 7. If net income for the year was $75,000 and a preferred stock dividend of $20,000 was paid, what was the beginning value of retained earnings? How much is earnings per share for the year?

For the current year ended, ABC had the following transactions: - Issued 10,000 shares of $2.00 par value common stock for $12.00 per share. - Issued 3,000 shares of $50 par value 6% preferred stock for $70 per share. - Purchased 1,000 shares of previously issued common stock for $15.00 per share. - Reported net income of $200,000. - Declared and paid a total dividend of $40,000. Assume that retained earnings had a beginning balance of $75,000. The company does not have any stock outstanding as of the beginning of the current year.

Double taxation is a disadvantage of a corporation because the corporation has to pay income taxes at twice the rate applied to partnerships.