Exam 13: Corporations: Organization and Capital Stock Transactions

Match the items below by entering the appropriate code letter in the space provided.

The term "Capital surplus" can be used instead of "Additional Paid-in Capital".

An inexperienced accountant for Chetola Corporation made the following entries. Instructions (a) On the basis of the explanation for each entry prepare the entry that should have been made for the transactions. (Omit explanations.) (b) Prepare the correcting entries that should be made to correct the accounts of Chetola Corporation. (Do not reverse the original entry.)

A corporation can be organized for the purpose of making a profit or it may be not-for-profit.

Additional paid-in capital includes all of the following except the amounts paid in

The following data is available for Santos Service Corporation at December 31 2017: Common stock, par $\$ 10$ (authorized 100,000 shares) $\quad$ $\$ 400,000$ Treasury Stock (at cost $\$ 15$ per share) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\$27,000$ Based on the data how many shares of common stock have been issued?

Par value of stock represents the __________________ per share that must be retained in the business for the protection of corporate ___________________.

When no-par value stock does not have a stated value the entire proceeds from the issuance of the stock becomes legal capital.

On January 1 2017 the stockholders' equity section of Intercontinental Corporation shows: Common stock ($5 par value) $1500000; paid-in capital in excess of par value $1000000; and retained earnings $1200000. During the year the following treasury stock transactions occurred. Mar. 1 $\quad$ Purchased 30,000 shares for cash at $\$ 20$ per share. July 1 $\quad$ Sold 6,000 treasury shares for cash at $\$ 27$ per share. Sept. 1 $\quad$ Sold 5,000 treasury shares for cash at $\$ 19$ per share. Instructions (a) Journalize the treasury stock transactions. (b) Restate the entry for September 1 assuming the treasury shares were sold at $10 per share.

In the balance sheet published in an annual report

The stockholders' equity section of a corporation's balance sheet consists of (1) paid-in capital (2) retained earnings and (3) drawings.

The authorized stock of a corporation

The following information is available for Mint Corporation: Common Stock ( \1 0 par) \ 1,500,000 Paid-in Capital in Excess of Par-Preferred 200,000 Paid-in Capital in Excess of Stated Value-Common 750,000 Preferred Stock 450,000 Retained Earnings 800,000 Treasury Stock\_Common 50,000 Instructions Based on the preceding information calculate each of the following: (a) Total paid-in capital. (b) Total stockholders' equity.

The ability of a corporation to obtain capital is

Cherokee Inc. paid $180000 to buy back 20000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a

Romesco Corporation's December 31 2017 balance sheet showed the following: 8% preferred stock $10 par value cumulative 40000 shares authorized; 20,000 shares issued \ 400,000 Common stock, \ 10 parvalue, 4,000,000 shares authorized; 1,950,000 shares issued, 3,860,000 shares outstanding 39,000,000 Paid-in capital in excess of par-preferred stock 120,000 Paid-in capital in excess of par-common stock 54,000,000 Retained earnings 15,300,000 Treasury stock (40,000 shares) 1,260,000 Romesco's total stockholders' equity was

Niley-Cook Corporation issued 200000 shares of $20 par value 6% preferred stock on January 1 2015 for $4500000. In December 2017 Niley-Cook declared its first dividend of $800000. Instructions (a) Prepare Niley-Cook's journal entry to record the issuance of the preferred stock. (b) If the preferred stock is not cumulative how much of the $800000 would be paid to common stockholders? (c) If the preferred stock is cumulative how much of the $800000 would be paid to common stockholders?

If a corporation's stock is traded on the major stock exchanges the corporation must generally report periodically to a federal agency known as the ____________________.

Retained earnings

Red October Company has 2000 shares of 6% $100 par cumulative preferred stock outstanding at December 31 2016. No dividends have been paid on this stock for 2016 or 2017. Dividends in arrears at December 31 2017 total