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

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Question 61

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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.

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Question 62

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A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be:

A) $5
B) $60
C) $25
D) $24

E) B) and D)
F) B) and C)

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Question 63

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

The issuance of common stock affects both paid-in capital and retained earnings.

A corporation has 10,000 shares of $100 par value stock outstanding. If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 40,000.

The day on which the board of directors of the corporation distributes a dividend is called the declaration date.

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

A restriction/appropriation of retained earnings

When a stock dividend is declared, which of the following accounts is credited?

A deficit in Retained Earnings is reported in the stockholders' equity section of the balance sheet.

Match the value to the appropriate account. For the year ended 2012 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 1000 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.

Morocco Inc. reported the following results for the year ending April 30, 2014: Prepare a retained earnings statement for the fiscal year ended April 30, 2014.

Which statement below is not a reason for a corporation to buy back its own stock.

Par value

The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 30,000 shares were originally issued and 5,000 were subsequently reacquired. What is the number of shares outstanding?

When common stock is issued in exchange for land, the land should be recorded in the accounts at the par amount of the stock issued.

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.

A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the Paid-In-Capital from Sale of Treasury account.

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

The ability of a corporation to obtain capital is