Exam 13: Corporations: Organization and Capital Stock Transactions

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

On February 1, Burchess Corporation issued 5,000 shares of its $20 par value preferred stock for $24 per share. Instructions Journalize the transaction.

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

Kerwin Packaging Corporation began business in 2010 by issuing 30,000 shares of $5 par common stock for $8 per share and 10,000 shares of 6%, $10 par preferred stock for par. At year end, the common stock had a market value of $10. On its December 31, 2010 balance sheet, Kerwin Packaging would report

In its first year of operations, Webber Corporation had the following transactions pertaining to its $10 par value preferred stock. Feb. 1 Issued 6,000 shares for cash at $41 per share. Nov. 1 Issued 3,000 shares for cash at $44 per share. Instructions (a) Journalize the transactions. (b) Indicate the amount to be reported for (1) preferred stock, and (2) paid-in capital in excess of par value-preferred stock at the end of the year.

Renner Corporation's December 31, 2010 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 20,000 shares Renner's total paid-in capital was

Treasury stock should not be classified as a current asset.

Match the items below by entering the appropriate code letter in the space provided. ____ 1. Net income retained in the corporation. ____ 2. The amount that must be retained in the business for the protection of creditors. ____ 3. Preferred stockholders have a right to receive current and unpaid prior-year dividends before common stockholders receive any dividends. ____ 4. Creditors only have corporate assets to satisfy their claims. ____ 5. Responsible to stockholders for corporate activity. ____ 6. The amount assigned to each share of stock in the corporate charter. ____ 7. Unit of ownership in a corporation. ____ 8. Enables stockholders to maintain their same percentage ownership when new shares are issued. ____ 9. Corporation's own stock that has been reacquired by the corporation but not retired. ____ 10. Total amount paid-in on capital stock.

Venco Corporation's December 31, 2010 balance sheet showed the following: 8% preferred stock, $20 par value, cumulative, 10,000 shares Venco's total stockholders' equity was

The par value of stock issued for noncash assets is never a factor in determining the cost of the assets received.

An inexperienced accountant for Otto 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 Otto Corporation. (Do not reverse the original entry.)

The corporate charter of Gregory Corporation allows the issuance of a maximum of 2,500,000 shares of $1 par value common stock. During its first three years of operation, Gregory issued 1,200,000 shares at $15 per share. It later acquired 20,000 of these shares as treasury stock for $25 per share. Instructions Based on the above information, answer the following questions: (a) How many shares were authorized? (b) How many shares were issued? (c) How many shares are outstanding? (d) What is the balance of the Common Stock account? (e) What is the balance of the Treasury Stock account?

Adcock Corporation began business by issuing 300,000 shares of $5 par value common stock for $24 per share. During its first year, the corporation sustained a net loss of $30,000. The year-end balance sheet would show

Randolph Corporation issued 5,000 shares of stock. Instructions Prepare the entry for the issuance under the following assumptions. (a) The stock had a par value of $5 per share and was issued for a total of $65,000. (b) The stock had a stated value of $5 per share and was issued for a total of $65,000. (c) The stock had a par value of $5 per share and was issued to attorneys for services during in-corporation valued at $65,000. (d) The stock had a par value of $5 per share and was issued for land worth $65,000.

The market value of a corporation's stock is determined by the number of shares that the corporation has been authorized to issue.

Retro Company is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. If Retro issues 5,000 shares of common stock to pay its recent attorney's bill of $20,000 for legal services on a land access dispute, which of the following would be the journal entry for Retro to record?

Dawson Company issued 500 shares of no-par common stock for $4,500. Which of the following journal entries would be made if the stock has a stated value of $2 per share?

In published annual reports

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

On January 1, 2010, the stockholders' equity section of Lopez Corporation shows: Common stock ($5 par value) $1,500,000; paid-in capital in excess of par value $1,000,000; and retained earnings $1,200,000. During the year, the following treasury stock transactions occurred. Mar. 1 Purchased 30,000 shares for cash at $15 per share. July 1 Sold 6,000 treasury shares for cash at $17 per share. Sept. 1 Sold 5,000 treasury shares for cash at $14 per share. Instructions (a) Journalize the treasury stock transactions. (b) Restate the entry for September 1, assuming the treasury shares were sold at $12 per share.