Question 1

Nelson Inc. sells 430 shares of its $16 par common stock for $31 per share. The entry would entail the following credit(s):

Accepted Answer

A)  Cash of $13,330. 
B)  Paid-in Capital in Excess of Par Value-Common for $6,880; Common Stock for $6,450. 
C)  Paid-in Capital in Excess of Par Value-Common for $6,450; Common Stock for $6,880. 
D)  Common Stock for $13,330. 
A)  Cash of $13,330. 
B)  Paid-in Capital in Excess of Par Value-Common for $6,880; Common Stock for $6,450. 
C)  Paid-in Capital in Excess of Par Value-Common for $6,450; Common Stock for $6,880. 
D)  Common Stock for $13,330.

Question 2

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Sold common stock at a price above the par value.
Debit ________ Credit ________ & ________

Accepted Answer

A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense 
A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense

Question 3

The Miranda Corporation Stockholders' Equity section includes the following:  
 What was the total amount preferred stock was sold for?

Accepted Answer

A)  $15,000 
B)  $18,000 
C)  $21,000 
D)  $34,000 
A)  $15,000 
B)  $18,000 
C)  $21,000 
D)  $34,000

Question 4

Stockholders cannot sell or transfer their stock.

Accepted Answer

A) True 
 B)False

Question 5

Stockholders with a right to current-year dividends but not dividends in arrears are:

Accepted Answer

A)  common stockholders. 
B)  cumulative preferred stockholders. 
C)  noncumulative preferred stockholders. 
D)  None of the above are correct. 
A)  common stockholders. 
B)  cumulative preferred stockholders. 
C)  noncumulative preferred stockholders. 
D)  None of the above are correct.

Question 6

Colder Industries has 30,000 shares of $10 par common stock and 8,500 shares of $50 par, 6% preferred stock outstanding. Total dividends available are $80,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is nonparticipating and cumulative with no dividends distributed last year.

Accepted Answer

Preferred Stock: $50

Question 7

The two main sources of stockholders' equity are investments by stockholders and net income retained in the corporation.

Accepted Answer

A) True 
 B)False

Question 8

The entry to record MidIowa.net selling 1,000 shares of $8.00 par value common stock at $10.00 would be to:

Accepted Answer

A)  debit Cash $10,000; credit Common Stock $8,000; credit Paid-in Capital in Excess of Par Value-Common $2,000. 
B)  debit Cash $10,000; credit Common Stock $10,000. 
C)  debit Cash $8,000; debit Paid-in Capital in Excess of Par Value-Common $2,000; credit Common Stock $10,000. 
D)  None of these answers is correct. 
A)  debit Cash $10,000; credit Common Stock $8,000; credit Paid-in Capital in Excess of Par Value-Common $2,000. 
B)  debit Cash $10,000; credit Common Stock $10,000. 
C)  debit Cash $8,000; debit Paid-in Capital in Excess of Par Value-Common $2,000; credit Common Stock $10,000. 
D)  None of these answers is correct.

Question 9

The Michigan Stockholders' Equity section includes the following:   
What was the total amount common stock was sold for?

Accepted Answer

A)  $9,700 
B)  $15,700 
C)  $14,200 
D)  $4,500 
A)  $9,700 
B)  $15,700 
C)  $14,200 
D)  $4,500

Question 10

RH Corporation Stockholders' Equity section includes the following information:  
 Total paid-in capital is:

Accepted Answer

A)  $60,000. 
B)  $67,000. 
C)  $34,000. 
D)  $74,000. 
A)  $60,000. 
B)  $67,000. 
C)  $34,000. 
D)  $74,000.

Question 11

Officers of the corporation are:

Accepted Answer

A)  appointed by the stockholders. 
B)  stockholders of the corporation. 
C)  appointed by the board of directors. 
D)  None of these answers is correct. 
A)  appointed by the stockholders. 
B)  stockholders of the corporation. 
C)  appointed by the board of directors. 
D)  None of these answers is correct.

Question 12

Par value represents:

Accepted Answer

A)  the market value of the stock. 
B)  an arbitrary value that is placed on each share of stock. 
C)  the legal capital of the corporation. 
D)  Both B and C are correct. 
A)  the market value of the stock. 
B)  an arbitrary value that is placed on each share of stock. 
C)  the legal capital of the corporation. 
D)  Both B and C are correct.

Question 13

The document granted by the state authorizing the creation of a corporation is known as:

Accepted Answer

A)  the articles of incorporation. 
B)  the certificate of achievement. 
C)  the certificate of incorporation. 
D)  the minutes book. 
A)  the articles of incorporation. 
B)  the certificate of achievement. 
C)  the certificate of incorporation. 
D)  the minutes book.

Question 14

Using the following accounts:
Indicate the account(s) to be debited and credited to record the following transaction.
-Exchanged common stock for a building and land when the stock was selling at a discount.
Debit ________ & ________ & ________ Credit ________

Accepted Answer

A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense 
A) Subscription receivable-common stock 
B) Cash 
C) Machinery 
D) Building 
E) Land
F)Organization costs
G)Preferred stock
H)Common stock
I)Paid in capital in excess of par value - common
J)Paid in capital in excess of par value - preferred
K)Common stock subscribed
L)Discount on common stock
M)Organization Expense

Question 15

A board of directors:

Accepted Answer

A)  are officers elected by the government to represent the company. 
B)  establish policies for the company. 
C)  may not include stockholders in the corporation. 
D)  All of the above are correct. 
A)  are officers elected by the government to represent the company. 
B)  establish policies for the company. 
C)  may not include stockholders in the corporation. 
D)  All of the above are correct.

Question 16

Alpha-Omega Industries has 30,000 shares of $12 par common stock and 15,000 shares of $50 par, 5% preferred stock outstanding. Total dividends available are $162,000. Compute the dividends to be distributed to preferred and common stockholders under the following condition.
The preferred stock is participating and cumulative with no dividends distributed last year.

Accepted Answer

Dividend for Preferred Stock: $50 par ×

Question 17

What is a right a preferred stockholder often gives up when purchasing preferred stock?

Accepted Answer

A)  Voting rights 
B)  Preemptive rights 
C)  Ability to sell stock 
D)  A and B are correct. 
A)  Voting rights 
B)  Preemptive rights 
C)  Ability to sell stock 
D)  A and B are correct.

Question 18

Common stock sold at a discount is called:

Accepted Answer

A)  at par. 
B)  above par. 
C)  at a premium. 
D)  below par. 
A)  at par. 
B)  above par. 
C)  at a premium. 
D)  below par.

Question 19

Noran Corporation has issued 4,800 shares of stock. Emily owns 490 shares. If the corporation issues an additional 900 shares, how many shares does Emily have the preemptive right to purchase? (Round intermediary calculations to two decimal places and the final answer to the nearest whole number.)

Accepted Answer

A)  490 shares 
B)  49 shares 
C)  90 shares 
D)  900 shares 
A)  490 shares 
B)  49 shares 
C)  90 shares 
D)  900 shares

Question 20

Shares of outstanding stock may not equal the number of shares of authorized stock.

Accepted Answer

A) True 
 B)False

Exam 18: Corporations: Organizations and Stock

Nelson Inc. sells 430 shares of its $16 par common stock for $31 per share. The entry would entail the following credit(s):

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Sold common stock at a price above the par value. Debit ________ Credit ________ & ________

The Miranda Corporation Stockholders' Equity section includes the following: What was the total amount preferred stock was sold for?

Stockholders cannot sell or transfer their stock.

Stockholders with a right to current-year dividends but not dividends in arrears are:

The two main sources of stockholders' equity are investments by stockholders and net income retained in the corporation.

The entry to record MidIowa.net selling 1,000 shares of $8.00 par value common stock at $10.00 would be to:

The Michigan Stockholders' Equity section includes the following: What was the total amount common stock was sold for?

RH Corporation Stockholders' Equity section includes the following information: Total paid-in capital is:

Officers of the corporation are:

Par value represents:

The document granted by the state authorizing the creation of a corporation is known as:

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Exchanged common stock for a building and land when the stock was selling at a discount. Debit ________ & ________ & ________ Credit ________

A board of directors:

What is a right a preferred stockholder often gives up when purchasing preferred stock?

Common stock sold at a discount is called:

Noran Corporation has issued 4,800 shares of stock. Emily owns 490 shares. If the corporation issues an additional 900 shares, how many shares does Emily have the preemptive right to purchase? (Round intermediary calculations to two decimal places and the final answer to the nearest whole number.)

Shares of outstanding stock may not equal the number of shares of authorized stock.

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Accounting for Property, Plant, Equipment, and Intangible Assets

Partnership

Corporations: Stock Values, Dividends, Treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Sold common stock at a price above the par value. Debit Credit &

Using the following accounts: Indicate the account(s) to be debited and credited to record the following transaction. -Exchanged common stock for a building and land when the stock was selling at a discount. Debit & & Credit