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

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Question 51

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A corporation has 12,000 shares of $20 par stock outstanding that has a current market value of $150.If the corporation issues a 4-for-1 stock split,the market value of the stock will fall to approximately $50.

A) True
B) False

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Question 52

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Match each of the following stockholders' equity concepts to the appropriate term (a-h) . -Document that formally creates a corporation

A) Articles of incorporation
B) Limited liability
C) Bylaws
D) Corporation
E) Public corporation
F) Board of directors
G) Private corporation
H) Dividends

I) B) and F)
J) C) and H)

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Question 53

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Prepare entries to record the following transactions for Maine Corp.:

Wonder Sales is authorized to issue 100,000 shares of 2%,$100 par preferred stock and 1,000,000 shares of $10 par common stock.Journalize the following transactions:​ (a)On January 2,Wonder Sales issues 5,000 shares of preferred stock for $110 per share and 65,000 shares of common stock at $10 per share.​ (b)On January 25,Wonder Sales issues 250 shares of preferred stock to Morton Law Firm for settlement of a $36,000 invoice for incorporation services.​ (c)On January 31,Wonder Sales issues 500 shares of common stock to Setup Inc.for fixtures that have a fair market value of $8,500.

A large public corporation normally uses registrars and transfer agents to maintain the records of stockholders.

The liability for a dividend is recorded on which of the following dates?

The declaration of a cash dividend decreases a corporation's stockholders equity and decreases its assets.

For the current year ended, ABC 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% preferred stock for $70 per share.Purchased 1,000 shares of previously issued common stock for $15 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. Match the following amounts to the appropriate term (a-h) . ​ -$330,000

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9.Subsequently,the company declared a 2% stock dividend on a date when the market price was $10 per share.The effect of the declaration and issuance of the stock dividend is to

Stockholders' equity

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

The excess of issue price over par of common stock is termed a (n)

On March 4 of the current year,Barefoot Bay,Inc.reacquired 5,000 shares of its common stock at $89 per share.On August 7,Barefoot Bay sold 3,500 of the reacquired shares at $100 per share.The remaining 1,500 shares were sold at $88 per share on November 29.Required

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

Sabas Company has 20,000 shares of $100 par,1% noncumulative preferred stock and 100,000 shares of $50 par common stock.The following amounts were distributed as dividends:​ Determine the dividends per share for preferred and common stock for each year.

The initial owners of stock of a newly formed corporation are called directors.

If common stock is issued for an amount greater than par value,the excess should be credited to

The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to

Match each of the following stockholders' equity concepts to the appropriate term (a-h) . -The date when dividends are actually distributed to stockholders

Big Bluestem Inc.reported the following results for the year ending April 30:​​ Prepare a retained earnings statement for the fiscal year ended April 30.