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

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Question 21

True/False

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The cost of treasury stock is deducted from total paid-in capital and retained earnings in determining total stockholders' equity.

A) True
B) False

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Question 22

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Retained earnings

A) is the same as contributed capital
B) must be restricted by law
C) changes are summarized in the retained earnings statement
D) is equal to cash on hand

E) C) and D)
F) All of the above

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Question 23

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The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.

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.Journalize the entries for April 1 and 7.

A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20.What is the amount of revenue realized from the sale?

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: ​ Determine the dividends in arrears for preferred stock for the second year.

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

The par value per share of common stock represents the

A 10% stock dividend will increase the number of shares outstanding but the book value per share will decrease.

Marcos Company,which had 35,000 shares of common stock outstanding,declared a 4-for-1 stock split.

The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.

The balance in Retained Earnings should be interpreted as representing surplus cash left over for dividends.

The date on which a cash dividend becomes a binding legal obligation is on the

The following transactions took place for the XYZ Corporation: ​ November 12 - Declared a total cash dividend of $45,000 for stockholders of record November 20 payable on December 1.Record the journal entries required by these events. ​ Briefly describe the significance of November 20.

On February 1 of the current year,Motor,Inc.issued 700 shares of $2 par common stock to an attorney in return for preparing and filing the articles of incorporation.The value of the services is $9,600.Journalize this transaction.

The authorized stock of a corporation

Which one of the following would not be considered an advantage of the corporate form of organization?

The charter of a corporation provides for the issuance of 100,000 shares of common stock.Assume that 40,000 shares were originally issued and 10,000 were subsequently reacquired.What is the number of shares outstanding?

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.

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 a share.What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?