Question 1

Cash dividends are paid on the basis of the number of shares

Accepted Answer

A)  authorized. 
B)  issued. 
C)  outstanding. 
D)  outstanding less the number of treasury shares. 
A)  authorized. 
B)  issued. 
C)  outstanding. 
D)  outstanding less the number of treasury shares. C

Question 2

Treasury stock.In 2014, Mordica Co. issued 300,000 of its 500,000 authorized shares of $10 par value common stock at $35 per share. In January, 2015, Mordica repurchased 25,000 shares at $30 per share. Assume these are the only stock transactions the company has ever had.
Instructions
(a) What are the two methods of accounting for treasury stock?
(b) Prepare the journal entry to record the purchase of treasury stock by the cost method.
(c) 9,000 shares of treasury stock are reissued at $33 per share. Prepare the journal entry to record the reissuance by the cost method.

Accepted Answer

The answer of Treasury stock.In 2014, Mordica Co. issued 300,000...

Question 3

In January 2014, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2014, Finley Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

Accepted Answer

A)  decreased total stockholders' equity. 
B)  increased total stockholders' equity. 
C)  did not change total stockholders' equity. 
D)  decreased the number of issued shares. 
A)  decreased total stockholders' equity. 
B)  increased total stockholders' equity. 
C)  did not change total stockholders' equity. 
D)  decreased the number of issued shares. A

Question 4

The accounting problem in a lump sum issuance is the allocation of proceeds between the classes of securities. An acceptable method of allocation is

Accepted Answer

A)  the pro forma method. 
B)  the proportional method. 
C)  the incremental method. 
D)  either the proportional method or the incremental method. 
A)  the pro forma method. 
B)  the proportional method. 
C)  the incremental method. 
D)  either the proportional method or the incremental method.

Question 5

Companies allocate the proceeds received from a lump-sum sale of securities based on the securities' par values.

Accepted Answer

A) True 
 B)False

Question 6

Turner Corporation had the following information in its financial statements for the year ended 2014 and 2015:   What is the payout ratio for Turner Corporation for the year ended 2015?

Accepted Answer

A)  11.5% 
B)  15.0% 
C)  23.1% 
D)  34.6% 
A)  11.5% 
B)  15.0% 
C)  23.1% 
D)  34.6%

Question 7

Stockholders' equity is generally classified into two major categories:

Accepted Answer

A)  contributed capital and appropriated capital. 
B)  appropriated capital and retained earnings. 
C)  retained earnings and unappropriated capital. 
D)  earned capital and contributed capital. 
A)  contributed capital and appropriated capital. 
B)  appropriated capital and retained earnings. 
C)  retained earnings and unappropriated capital. 
D)  earned capital and contributed capital.

Question 8

On December 1, 2014, Abel Corporation exchanged 40,000 shares of its $10 par value common stock held in treasury for a used machine. The treasury shares were acquired by Abel at a cost of $40 per share, and are accounted for under the cost method. On the date of the exchange, the common stock had a fair value of $55 per share (the shares were originally issued at $30 per share). As a result of this exchange, Abel's total stockholders' equity will increase by

Accepted Answer

A)  $ 400,000. 
B)  $1,600,000. 
C)  $2,200,000. 
D)  $1,800,000. 
A)  $ 400,000. 
B)  $1,600,000. 
C)  $2,200,000. 
D)  $1,800,000.

Question 9

Treasury stock.Ellison Company's balance sheet shows:   
InstructionsRecord the following transactions by the cost method.
(a) Bought 8,000 shares of its common stock at $29 a share.
(b) Sold 4,000 treasury shares at $30 a share.
(c) Sold 2,000 shares of treasury stock at $26 a share.

Accepted Answer

The answer of Treasury stock.Ellison Company's balance sheet shows: ...

Question 10

Layne Corporation had the following information in its financial statements for the years ended 2014 and 2015:   What is the payout ratio for Layne Corporation for the year ended 2015?

Accepted Answer

A)  30.1% 
B)  18.1% 
C)  14.7% 
D)  12.0% 
A)  30.1% 
B)  18.1% 
C)  14.7% 
D)  12.0%

Question 11

Stock dividends.Describe the journal entry for a stock dividend on common stock (which has a par value).

Accepted Answer

A stock dividend results in the transfer

Question 12

Lump sum issuance of stock.Parker Corporation has issued 2,000 shares of common stock and 400 shares of preferred stock for a lump sum of $74,000 cash.
Instructions
(a) Give the entry for the issuance assuming the par value of the common stock was $5 and the fair value $30, and the par value of the preferred stock was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each stock.)(b) Give the entry for the issuance assuming the same facts as 
(a) above except the preferred stock has no ready market and the common stock has a fair value of $24 per share.

Accepted Answer

The answer of Lump sum issuance of stock.Parker Corporation has...

Question 13

Which of the following best describes a possible result of treasury stock transactions by a corporation?

Accepted Answer

A)  May increase but not decrease retained earnings. 
B)  May increase net income if the cost method is used. 
C)  May decrease but not increase retained earnings. 
D)  May decrease but not increase net income. 
A)  May increase but not decrease retained earnings. 
B)  May increase net income if the cost method is used. 
C)  May decrease but not increase retained earnings. 
D)  May decrease but not increase net income.

Question 14

Presented below is information related to Wyrick Company:"1. The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.2. 9,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $300,000. The board establishes a stated value of $10 a share for the common stock.3. 6,000 shares of preferred stock are sold for cash at $110 per share.""4. The company issues 150 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $60 per share.
InstructionsPrepare the general journal entries necessary to record these transactions."

Accepted Answer

The answer of Presented below is information related to Wyrick...

Question 15

A corporation was organized in January 2014 with authorized capital of $10 par value common stock. On February 1, 2014, shares were issued at par for cash. On March 1, 2014, the corporation's attorney accepted 7,000 shares of common stock in settlement for legal services with a fair value of $90,000. Additional paid-in capital would increase on

Accepted Answer

The answer of A corporation was organized in January 2014...

Question 16

Which one of the following disclosures should be made in the equity section of the balance sheet, rather than in the notes to the financial statements?

Accepted Answer

A)  Dividend preferences 
B)  Liquidation preferences 
C)  Call prices 
D)  Conversion or exercise prices 
A)  Dividend preferences 
B)  Liquidation preferences 
C)  Call prices 
D)  Conversion or exercise prices

Question 17

Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as

Accepted Answer

A)  an increase in current liabilities. 
B)  an increase in stockholders' equity. 
C)  a footnote. 
D)  an increase in current liabilities for the current portion and long-term liabilities for the long-term portion. 
A)  an increase in current liabilities. 
B)  an increase in stockholders' equity. 
C)  a footnote. 
D)  an increase in current liabilities for the current portion and long-term liabilities for the long-term portion.

Question 18

The cumulative feature of preferred stock

Accepted Answer

A)  limits the amount of cumulative dividends to the par value of the preferred stock. 
B)  requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders. 
C)  means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock. 
D)  enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends. 
A)  limits the amount of cumulative dividends to the par value of the preferred stock. 
B)  requires that dividends not paid in any year must be made up in a later year before dividends are distributed to common shareholders. 
C)  means that the shareholder can accumulate preferred stock until it is equal to the par value of common stock at which time it can be converted into common stock. 
D)  enables a preferred stockholder to accumulate dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.

Question 19

Stockholders' Equity.Indicate the effect of each of the following transactions on total stockholders' equity by placing an "X" in the appropriate column.

Accepted Answer

The answer of Stockholders' Equity.Indicate the effect of each of...

Question 20

Younger Company has outstanding both common stock and nonparticipating, non-cumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by

Accepted Answer

A)  the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value. 
B)  the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par value. 
C)  the payment of a previously declared cash dividend on the common stock. 
D)  a 2-for-1 split of the common stock. 
A)  the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value. 
B)  the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par value. 
C)  the payment of a previously declared cash dividend on the common stock. 
D)  a 2-for-1 split of the common stock.

Cash dividends are paid on the basis of the number of shares

In January 2014, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2014, Finley Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

The accounting problem in a lump sum issuance is the allocation of proceeds between the classes of securities. An acceptable method of allocation is

Companies allocate the proceeds received from a lump-sum sale of securities based on the securities' par values.

Turner Corporation had the following information in its financial statements for the year ended 2014 and 2015: What is the payout ratio for Turner Corporation for the year ended 2015?

Stockholders' equity is generally classified into two major categories:

Treasury stock.Ellison Company's balance sheet shows: InstructionsRecord the following transactions by the cost method. (a) Bought 8,000 shares of its common stock at $29 a share. (b) Sold 4,000 treasury shares at $30 a share. (c) Sold 2,000 shares of treasury stock at $26 a share.

Layne Corporation had the following information in its financial statements for the years ended 2014 and 2015: What is the payout ratio for Layne Corporation for the year ended 2015?

Stock dividends.Describe the journal entry for a stock dividend on common stock (which has a par value).

Which of the following best describes a possible result of treasury stock transactions by a corporation?

Which one of the following disclosures should be made in the equity section of the balance sheet, rather than in the notes to the financial statements?

Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as

The cumulative feature of preferred stock

Stockholders' Equity.Indicate the effect of each of the following transactions on total stockholders' equity by placing an "X" in the appropriate column.

Younger Company has outstanding both common stock and nonparticipating, non-cumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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Exam 15: Stockholders Equity

Cash dividends are paid on the basis of the number of shares

In January 2014, Finley Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2014, Finley Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

The accounting problem in a lump sum issuance is the allocation of proceeds between the classes of securities. An acceptable method of allocation is

Companies allocate the proceeds received from a lump-sum sale of securities based on the securities' par values.

Turner Corporation had the following information in its financial statements for the year ended 2014 and 2015: What is the payout ratio for Turner Corporation for the year ended 2015?

Stockholders' equity is generally classified into two major categories:

Treasury stock.Ellison Company's balance sheet shows: InstructionsRecord the following transactions by the cost method. (a) Bought 8,000 shares of its common stock at $29 a share. (b) Sold 4,000 treasury shares at $30 a share. (c) Sold 2,000 shares of treasury stock at $26 a share.

Layne Corporation had the following information in its financial statements for the years ended 2014 and 2015: What is the payout ratio for Layne Corporation for the year ended 2015?

Stock dividends.Describe the journal entry for a stock dividend on common stock (which has a par value).

Which of the following best describes a possible result of treasury stock transactions by a corporation?

Which one of the following disclosures should be made in the equity section of the balance sheet, rather than in the notes to the financial statements?

Cumulative preferred dividends in arrears should be shown in a corporation's balance sheet as

The cumulative feature of preferred stock

Stockholders' Equity.Indicate the effect of each of the following transactions on total stockholders' equity by placing an "X" in the appropriate column.

Younger Company has outstanding both common stock and nonparticipating, non-cumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

Filters