Exam 21: Corporations: Earnings, Taxes, Distributions, and the Retained Earnings Statement

Prepare journal entries for each of the following transactions. June 25 Declared a 7% stock dividend to common shareholders. The market value of the common stock is $14 per share. The par value is $13. There are 60,000 shares of common stock outstandinG.July 1 Issued stock dividend in settlement of dividend declared on June 25. ​

In corporate accounting, a distinction is made between paid-in or invested capital and capital resulting from retained earnings.

Match the terms with the definitions. -A restriction of retained earnings by the board of directors for a specific purpose.

Typically, the only credit to the retained earnings account for a corporation is

Stock dividends typically are stated as a percentage of common stock outstanding.

Match the terms with the definitions. -A dividend payable in cash.

Capital resulting from the retention of earnings should be entered in an account with an appropriate title such as

The appropriated retained earnings can be returned to the unappropriated retained earnings account

The two major sources of capital for every type of business are capital that results from the investment of cash or other property by the owner or owners and capital that results from the receipt of dividends.

Prepare appropriate general journal entries for each of the following transactions for Litefoot, InC.Oct. 1 Declared a dividend of $1.53 per share on 6,000 shares of preferred stock outstandinG.20 Paid the dividend on preferred stock declared on October 1. ​

If a balance sheet is prepared between the date of declaration and date of payment, dividends payable accounts are reported as current liabilities.

The balance of the income summary account of a corporation is transferred to which of the following accounts?

The effect of a retained earnings appropriation is to

On January 1, 20--, Sargento Corporation's retained earnings accounts had the following balances: Required: Complete the retained earnings statement for the year ended December 31, 20--.

Cash dividends reduce both the retained earnings and the stockholders' equity in the corporation.

An exchange of one share of an old issue of stock for a multiple number of shares of a new issue of stock with reduced par or stated value is known as a

An adjusting entry is not required if the estimated payments made throughout the year are more than the actual taxes due.

Match the terms with the definitions. -The date on which the board of directors declares that a dividend is to be paid.

On January 1, Martinez Corporation's retained earnings accounts had the following balances: ​ Required: Prepare the retained earnings statement for the year ended December 31, 20--.

One thing that the sole proprietorship and the corporate form of organization have in common is that neither must pay income taxes.