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Exam 11: Corporations: Organization, Stock Transactions, and Dividends

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Question 61

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On February 13, Epperson Company issue for cash 75,000 shares of no-par common stock (with a stated value of $125) at $140. On September 9, Epperson issued at par 15,000 share of 1%, $60 par preferred stock at par for cash On November 23, Epperson issued for cash 8,000 shares of 1%, $60 par preferred stock at $70. Required: Journalize the entries to record the February 13, September 9 and November 23 transactions.

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Question 62

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

A) resale to employees
B) bonus to employees
C) for supporting the market price of the stock
D) to increase the shares outstanding

E) B) and D)
F) None of the above

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Question 63

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On February 1 of the current year, Motor, Inc. issued 500 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 $8,500. Journalize this transaction.

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.

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.

On April 10, a company acquired land in exchange for 1,000 shares of $20 par common stock with a current market price of $73. Journalize this transaction.

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

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

Which of the following is not characteristic of a corporation?

Merritt Company acquired a building valued at $190,000 for property tax purposes in exchange for 12,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 per share. At what amount should the building be recorded by Merritt Company?

A restriction/appropriation of retained earnings establishes cash assets that are set aside for a specific purpose.

Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels' earnings per share for 2011 is

The ability of a corporation to obtain capital is

A company had stock outstanding as follows during each of its first three years of operations: 2,500 shares of $10, $100 par, cumulative preferred stock and 50,000 shares of $10 par common stock. The amounts distributed as dividends are presented below. Determine the total and per share dividends for each class of stock for each year by completing the schedule.

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

The following transactions took place for the XYZ Corporation; a. November 12th - Declared a total cash dividend of $45,000 for stockholders of record November 20th payable on December 1st. Record the journal entry, if necessary, for the following events; Nov. 12 - Nov. 20 - Dec. 1 - b. Briefly describe the significance of November 20th.

In which section of the financial statements would Paid-In Capital from Sale of Treasury Stock be reported?

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.

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 4% stock dividend on a date when the market price was $12 a share. What is the amount transferred from the Retained Earnings account to Paid-in Capital accounts as a result of the stock dividend?

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: