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

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Question 31

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Vincent Corporation has 100,000 share of $100 par common stock outstanding. On June 30, Vincent Corporation declared a 5% stock dividend to be issued on July 30 to stockholders of record July 15. The market price of the stock was $132 a share on June 30. Journalize the entries required on June 30, July 15 and July 30.

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Question 32

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

A) $25
B) $150
C) $5
D) $30

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

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Question 33

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The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 45,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

Match the following stockholder's equity concepts to the best answer.

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

Before a stock dividend can be declared or paid, there must be sufficient cash.

A corporation issues 2,500 shares of common stock for $ 45,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

The entry to record the issuance of common stock at a price above par includes a debit to

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

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

The authorized stock of a corporation

If 50,000 shares are authorized, 41,000 shares are issued, and 2,000 shares are reacquired, the number of outstanding shares is 43,000.

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

Prepare entries to record the following:

Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company's total assets, liabilities, and stockholders' equity.

The balance in Retained Earnings at the end of the period is created by closing entries.

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

The retained earnings statement may be combined with the income statement.

One of the main disadvantages of the corporate form is the

The state charter allows a corporation to issue only a certain number of shares of each class of stock. This amount of stock is called