Question 1

Corporations report which of the following in a separate section of the income statement?

Accepted Answer

A)  cost of goods sold. 
B)  income tax expense. 
C)  gross profit. 
D)  other revenues and gains. 
A)  cost of goods sold. 
B)  income tax expense. 
C)  gross profit. 
D)  other revenues and gains.

Question 2

Corporations sometimes segregate retained earnings into two categories: (1)________________ retained earnings and (2)________________ retained earnings.

Accepted Answer

restricted

Question 3

A net loss

Accepted Answer

A)  occurs if operating expenses exceed cost of goods sold. 
B)  is not closed to Retained Earnings if it would result in a debit balance. 
C)  is closed to Retained Earnings even if it would result in a debit balance. 
D)  is closed to the paid-in capital account of the stockholders' equity section of the balance sheet. 
A)  occurs if operating expenses exceed cost of goods sold. 
B)  is not closed to Retained Earnings if it would result in a debit balance. 
C)  is closed to Retained Earnings even if it would result in a debit balance. 
D)  is closed to the paid-in capital account of the stockholders' equity section of the balance sheet.

Question 4

Earnings per share is reported only for common stock.

Accepted Answer

A) True 
 B)False

Question 5

The following selected amounts are available for Sanders Company.   What is its ending retained earnings balance?

Accepted Answer

A)  $650 
B)  $700 
C)  $550 
D)  $600 
A)  $650 
B)  $700 
C)  $550 
D)  $600

Question 6

Franklin, Inc. declares a 10% common stock dividend when it has 30,000 shares of $10 par value common stock outstanding. If the market value of $24 per share is used, the amounts debited to Retained Earnings and credited to Paid-in Capital in Excess of Par Value are:

Accepted Answer

The answer of Franklin, Inc. declares a 10% common stock...

Question 7

Devons Company has 24,000 shares of $1 par common stock issued and outstanding. The company also has 2,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2009 or 2010. What amount of dividends must the company pay the preferred shareholders in 2011 if they wish to pay the common stockholders a dividend?

Accepted Answer

Annual preferred dividend: 2,0

Question 8

Retained earnings that are restricted are unavailable for dividends.

Accepted Answer

A) True 
 B)False

Question 9

Colson Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Colson distribute to the common stockholders?

Accepted Answer

A)  $76,000. 
B)  $84,000. 
C)  $118,000. 
D)  None. 
A)  $76,000. 
B)  $84,000. 
C)  $118,000. 
D)  None.

Question 10

The date on which a cash dividend becomes a binding legal obligation is on the

Accepted Answer

A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year-end. 
A)  declaration date. 
B)  date of record. 
C)  payment date. 
D)  last day of the fiscal year-end.

Question 11

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

Accepted Answer

A) True 
 B)False

Question 12

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 13

Jennifer Company reports the following amounts for 2010:   The 2010 rate of return on common stockholders' equity is

Accepted Answer

A)  25.0%. 
B)  22.5%. 
C)  27.0%. 
D)  33.8%. 
A)  25.0%. 
B)  22.5%. 
C)  27.0%. 
D)  33.8%.

Question 14

Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2010. If the board of directors declares a $200,000 dividend, the

Accepted Answer

A)  preferred stockholders will receive 1/10th of what the common stockholders will receive. 
B)  preferred stockholders will receive the entire $200,000. 
C)  $60,000 will be held as restricted retained earnings and paid out at some future date. 
D)  preferred stockholders will receive $60,000 and the common stockholders will receive $140,000. 
A)  preferred stockholders will receive 1/10th of what the common stockholders will receive. 
B)  preferred stockholders will receive the entire $200,000. 
C)  $60,000 will be held as restricted retained earnings and paid out at some future date. 
D)  preferred stockholders will receive $60,000 and the common stockholders will receive $140,000.

Question 15

On December 31, 2010, Springer, Inc. has 3,000 shares of 6% $100 par value cumulative preferred stock and 45,000 shares of $10 par value common stock outstanding. On December 31, 2010, the directors declare a $12,000 cash dividend. The entry to record the declaration of the dividend would include:

Accepted Answer

A)  a credit of $6,000 to Retained Earnings. 
B)  a note in the financial statements that dividends of $6 per share are in arrears on preferred stock for 2010. 
C)  a debit of $12,000 to Common Stock. 
D)  a credit of $12,000 to Dividends Payable. 
A)  a credit of $6,000 to Retained Earnings. 
B)  a note in the financial statements that dividends of $6 per share are in arrears on preferred stock for 2010. 
C)  a debit of $12,000 to Common Stock. 
D)  a credit of $12,000 to Dividends Payable.

Question 16

When stock dividends are distributed,

Accepted Answer

A)  Common Stock Dividends Distributable is decreased. 
B)  Retained Earnings is decreased. 
C)  Paid-in Capital in Excess of Par Value is debited if it is a small stock dividend. 
D)  no entry is necessary if it is a large stock dividend. 
A)  Common Stock Dividends Distributable is decreased. 
B)  Retained Earnings is decreased. 
C)  Paid-in Capital in Excess of Par Value is debited if it is a small stock dividend. 
D)  no entry is necessary if it is a large stock dividend.

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

Corporations report which of the following in a separate section of the income statement?

Corporations sometimes segregate retained earnings into two categories: (1)________________ retained earnings and (2)________________ retained earnings.

A net loss

Earnings per share is reported only for common stock.

The following selected amounts are available for Sanders Company. What is its ending retained earnings balance?

Franklin, Inc. declares a 10% common stock dividend when it has 30,000 shares of $10 par value common stock outstanding. If the market value of $24 per share is used, the amounts debited to Retained Earnings and credited to Paid-in Capital in Excess of Par Value are:

Retained earnings that are restricted are unavailable for dividends.

Colson Inc. declared a $160,000 cash dividend. It currently has 6,000 shares of 7%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Colson distribute to the common stockholders?

The date on which a cash dividend becomes a binding legal obligation is on the

Net income of a corporation should be closed to retained earnings and net losses should be closed to paid-in capital accounts.

A prior period adjustment is reported as an adjustment of the beginning balance of Retained Earnings.

Jennifer Company reports the following amounts for 2010: The 2010 rate of return on common stockholders' equity is

Allstate, Inc., has 10,000 shares of 6%, $100 par value, noncumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2010. If the board of directors declares a $200,000 dividend, the

On December 31, 2010, Springer, Inc. has 3,000 shares of 6% $100 par value cumulative preferred stock and 45,000 shares of $10 par value common stock outstanding. On December 31, 2010, the directors declare a $12,000 cash dividend. The entry to record the declaration of the dividend would include:

When stock dividends are distributed,

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

Filters

Corporations sometimes segregate retained earnings into two categories: (1) retained earnings and (2) retained earnings.