Question 1

Earnings per share indicates the net income earned by each share of outstanding common stock.

Accepted Answer

A) True 
 B)False

Question 2

Corporation income tax expense is

Accepted Answer

A)  usually accrued in the adjusting entry process. 
B)  not usually accrued because it is not known what the exact liability will be until the tax return is filed. 
C)  not reported in a separate section of a corporate income statement. 
D)  reported similarly for corporations and partnerships. 
A)  usually accrued in the adjusting entry process. 
B)  not usually accrued because it is not known what the exact liability will be until the tax return is filed. 
C)  not reported in a separate section of a corporate income statement. 
D)  reported similarly for corporations and partnerships.

Question 3

Corporations generally issue stock dividends in order to

Accepted Answer

A)  increase the market price per share. 
B)  exceed stockholders' dividend expectations. 
C)  increase the marketability of the stock. 
D)  decrease the amount of capital in the corporation. 
A)  increase the market price per share. 
B)  exceed stockholders' dividend expectations. 
C)  increase the marketability of the stock. 
D)  decrease the amount of capital in the corporation.

Question 4

Jansen Corporation had 300,000 shares of common stock outstanding during the year. Jansen declared and paid cash dividends of $200,000 on the common stock and $160,000 on the preferred stock. Net income for the year was $880,000. What is Jansen's earnings per share?

Accepted Answer

A)  $1.73 
B)  $2.27 
C)  $2.40 
D)  $2.93 
A)  $1.73 
B)  $2.27 
C)  $2.40 
D)  $2.93

Question 5

Cuther Inc., has 1,000 shares of 6%, $50 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2009, and December 31, 2010. The board of directors declared and paid a $2,000 dividend in 2009. In 2010, $12,000 of dividends are declared and paid. What are the dividends received by the common stockholders in 2010?

Accepted Answer

A)  $8,000 
B)  $6,000 
C)  $4,000 
D)  $3,000 
A)  $8,000 
B)  $6,000 
C)  $4,000 
D)  $3,000

Question 6

A credit balance in retained earnings represents

Accepted Answer

A)  the amount of cash retained in the business. 
B)  a claim on specific assets of the corporation. 
C)  a claim on the aggregate assets of the corporation. 
D)  the amount of stockholders' equity exempted from the stockholders' claim on total assets. 
A)  the amount of cash retained in the business. 
B)  a claim on specific assets of the corporation. 
C)  a claim on the aggregate assets of the corporation. 
D)  the amount of stockholders' equity exempted from the stockholders' claim on total assets.

Question 7

Dividends Payable is classified as a

Accepted Answer

A)  long-term liability. 
B)  contra stockholders' equity account to Retained Earnings. 
C)  current liability. 
D)  stockholders' equity account. 
A)  long-term liability. 
B)  contra stockholders' equity account to Retained Earnings. 
C)  current liability. 
D)  stockholders' equity account.

Question 8

Which one of the following events would not require a formal journal entry on a corporation's books?

Accepted Answer

A)  2 for 1 stock split 
B)  100% stock dividend 
C)  2% stock dividend 
D)  $1 per share cash dividend 
A)  2 for 1 stock split 
B)  100% stock dividend 
C)  2% stock dividend 
D)  $1 per share cash dividend

Question 9

Assume that all balance sheet amounts for Remington Company represent average balance figures.   What is the earnings per share for Remington?

Accepted Answer

A)  $2.70 
B)  $2.30 
C)  $1.70 
D)  $1.30 
A)  $2.70 
B)  $2.30 
C)  $1.70 
D)  $1.30

Question 10

West, Inc. has a net income of $500,000 for 2010, and there are 200,000 weighted-average shares of common stock outstanding. Dividends declared and paid during the year amounted to $80,000 on the preferred stock and $120,000 on the common stock. The earnings per share for 2010 is

Accepted Answer

A)  $2.50. 
B)  $1.90. 
C)  $2.10. 
D)  $1.50. 
A)  $2.50. 
B)  $1.90. 
C)  $2.10. 
D)  $1.50.

Question 11

Richman Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a 10% stock dividend on June 1 when the market price per share was $12. The shares were issued on June 30.
Instructions
Prepare the necessary entries for the declaration and payment of the stock dividend.

Accepted Answer

The answer of Richman Corporation has 120,000 shares of $5...

Question 12

Reese Company reported retained earnings at December 31, 2009, of $310,000. Reese had 160,000 shares of common stock outstanding throughout 2010.
The following transactions occurred during 2010.
1. An error was discovered in 2008, depreciation expense was recorded at $60,000, but the correct amount was $50,000.
2. A cash dividend of $0.50 per share was declared and paid.
3. A 5% stock dividend was declared and distributed when the market price per share was $15 per share.
4. Net income was $225,000.
Instructions
Prepare a retained earnings statement for 2010.

Accepted Answer

@#IMG-DLM& ¹(160,0

Question 13

On January 1, Edmiston Corporation had 1,000,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 20% stock dividend. Market value of the stock was $15/share. As a result of this event,

Accepted Answer

A)  Edmiston's Paid-in Capital in Excess of Par Value account increased $1,000,000. 
B)  Edmiston's total stockholders' equity was unaffected. 
C)  Edmiston's Retained Earnings account decreased $3,000,000. 
D)  All of the above. 
A)  Edmiston's Paid-in Capital in Excess of Par Value account increased $1,000,000. 
B)  Edmiston's total stockholders' equity was unaffected. 
C)  Edmiston's Retained Earnings account decreased $3,000,000. 
D)  All of the above.

Question 14

The per share amount normally assigned by the board of directors to a large stock dividend is

Accepted Answer

A)  the market value of the stock on the date of declaration. 
B)  the average price paid by stockholders on outstanding shares. 
C)  the par or stated value of the stock. 
D)  zero. 
A)  the market value of the stock on the date of declaration. 
B)  the average price paid by stockholders on outstanding shares. 
C)  the par or stated value of the stock. 
D)  zero.

Question 15

Identify which of the following items would be reported as additions (A) or deductions (D) in a Retained Earnings Statement.
1. Net Income
2. Net Loss
3. Cash Dividends
4. Stock Dividends
5. Prior period adjustments to correct for overstatement of prior years' net income
6. Prior period adjustments to correct for understatement of prior years' net income

Accepted Answer

1. A 4. D

Question 16

Each of the following decreases total stockholders' equity except a

Accepted Answer

A)  cash dividend. 
B)  liquidating dividend. 
C)  stock dividend. 
D)  All of these decrease total stockholders' equity. 
A)  cash dividend. 
B)  liquidating dividend. 
C)  stock dividend. 
D)  All of these decrease total stockholders' equity.

Question 17

On January 1, Swanson Corporation had 60,000 shares of $10 par value common stock outstanding. On March 17, the company declared a 15% stock dividend to stockholders of record on March 20. Market value of the stock was $13 on March 17. The stock was distributed on March 30. The entry to record the transaction of March 30 would include a

Accepted Answer

A)  credit to Cash for $90,000. 
B)  debit to Common Stock Dividends Distributable for $90,000. 
C)  credit to Paid-in Capital in Excess of Par Value for $27,000. 
D)  debit to Retained Earnings for $27,000. 
A)  credit to Cash for $90,000. 
B)  debit to Common Stock Dividends Distributable for $90,000. 
C)  credit to Paid-in Capital in Excess of Par Value for $27,000. 
D)  debit to Retained Earnings for $27,000.

Question 18

The retained earnings statement

Accepted Answer

A)  is the owners' equity statement for a corporation. 
B)  will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year. 
C)  will not reflect net losses. 
D)  will, in some cases, fail to reconcile the beginning and ending retained earnings balances. 
A)  is the owners' equity statement for a corporation. 
B)  will show an addition to the beginning retained earnings balance for an understatement of net income in a prior year. 
C)  will not reflect net losses. 
D)  will, in some cases, fail to reconcile the beginning and ending retained earnings balances.

Question 19

A stock split

Accepted Answer

A)  may occur in the absence of retained earnings. 
B)  will increase total paid-in capital. 
C)  will increase the total par value of the stock. 
D)  will have no effect on the par value per share of stock. 
A)  may occur in the absence of retained earnings. 
B)  will increase total paid-in capital. 
C)  will increase the total par value of the stock. 
D)  will have no effect on the par value per share of stock.

Question 20

Harris Corporation had net income of $230,000 and paid dividends of $50,000 to common stockholders and $20,000 to preferred stockholders in 2010. Harris Corporation's common stockholders' equity at the beginning and end of 2010 was $870,000 and $1,130,000, respectively. There are 100,000 weighted-average shares of common stock outstanding.
Harris Corporation's earnings per share for 2010 was

Accepted Answer

A)  $2.30. 
B)  $2.10. 
C)  $1.80. 
D)  $1.60. 
A)  $2.30. 
B)  $2.10. 
C)  $1.80. 
D)  $1.60.

Exam 14: Corporations: Dividends, Retained Earnings, and Income Reporting

Earnings per share indicates the net income earned by each share of outstanding common stock.

Corporation income tax expense is

Corporations generally issue stock dividends in order to

Jansen Corporation had 300,000 shares of common stock outstanding during the year. Jansen declared and paid cash dividends of $200,000 on the common stock and $160,000 on the preferred stock. Net income for the year was $880,000. What is Jansen's earnings per share?

A credit balance in retained earnings represents

Dividends Payable is classified as a

Which one of the following events would not require a formal journal entry on a corporation's books?

Assume that all balance sheet amounts for Remington Company represent average balance figures. What is the earnings per share for Remington?

West, Inc. has a net income of $500,000 for 2010, and there are 200,000 weighted-average shares of common stock outstanding. Dividends declared and paid during the year amounted to $80,000 on the preferred stock and $120,000 on the common stock. The earnings per share for 2010 is

Richman Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a 10% stock dividend on June 1 when the market price per share was $12. The shares were issued on June 30. Instructions Prepare the necessary entries for the declaration and payment of the stock dividend.

On January 1, Edmiston Corporation had 1,000,000 shares of $10 par value common stock outstanding. On March 31, the company declared a 20% stock dividend. Market value of the stock was $15/share. As a result of this event,

The per share amount normally assigned by the board of directors to a large stock dividend is

Each of the following decreases total stockholders' equity except a

The retained earnings statement

A stock split

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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