Exam 20: Corporations: Formation and Capital Stock Transactions

A corporation has 5,000 shares of 6 percent, $100 par-value preferred stock and 50,000 shares of $2 par-value common stock outstanding. If the board of the directors declares dividends totaling $90,000, the common stockholders will receive a dividend of:

The stockholders of a corporation are agents of the corporation empowered to act for the firm.

Which of the following statements is correct?

A corporation received a subscription for 100 shares of 10 percent, $100 par-value preferred stock at $103 a share. The entry to record this transaction consists of a debit to Subscriptions Receivable -Preferred for $10,300 and a credit to:

Corning Corporation issued 1,000 shares of its $5 par-value common stock for cash at $13 a share. Record the issuance of the stock on page 1 of a general journal. Omit the description.

The Lompoc Corporation is authorized to issue 500,000 shares of $4 par-value common stock and 100,000 shares of 6 percent, $100 par-value preferred stock. Record the following transactions on page 1 of a general journal. Omit descriptions. Jan. 1 The corporation issued 10,000 shares of common stock to Charles Bogle for $30 per share, purchased with cash. 2 Issued 5,000 shares of preferred stock to Floyd Merkle for $110 per share, purchased with cash. 2 Paid the attorney $1,200 for legal fees, charter fee, and cost of engraving stock certificates.

Turque Corporation issued 6,200 shares of its no-par-value common stock (stated value, $15)for cash at $24 a share. Record the issuance of the stock on page 1 of a general journal. Omit the description.

If only one class of stock is issued by a corporation, it is referred to as:

Ari Hightower owns 250 shares of preferred stock that is convertible into common stock at the rate of 3 shares for every share of preferred stock surrendered. If she surrenders all her preferred stock, she will receive------------ shares of common stock.

Preferred Stock is shown in the Stockholders' Equity section of the balance sheet.

The Maynard Corporation has outstanding 10,000 shares of 10 percent, $50 par-value, cumulative, nonparticipating preferred stock and 80,000 shares of $10 par-value common stock. There were no dividends in arrears. The board of directors voted to distribute $40,000 as dividends in 2019, $55,000 in 2020, and $65,000 in 2021. Compute the following: 1. Total dividend paid to preferred stockholders in 2019. 2. Total dividend paid to common stockholders in 2019. 3. Total dividend paid to preferred stockholders in 2020. 4. Total dividend paid to common stockholders in 2020. 5. Total dividend paid to preferred stockholders in 2021. 6. Total dividend paid to common stockholders in 2021.

Venti Corporation has outstanding 100,000 shares of $50 par-value preferred stock, issued at an average price of $74 a share. The preferred stock is convertible into common stock at the rate of two shares of common stock for each share of preferred stock. Martin Spellman owns 180 shares of the preferred stock. During the current year he decides to convert 80 shares into common stock. How many shares of common stock will he receive?

TrustOne Corporation issued 10,000 shares of no-par common stock, $3 stated value in exchange for $45,000. The entry to record the issuance includes a:

The owners of a corporation are called----------- .

A partial balance sheet for VanWorth Corporation is presented below. Required: 1. Determine how many shares of common stock are outstanding. 2. Compute the number of shares of common stock subscribed. 3. Calculate the number of preferred stock outstanding. 4. At what average price was paid to acquire shares of common stock?

When shares of a corporation's stock are transferred from one investor to another, an entry is recorded in the capital stock transfer journal.

For the year just ended, a company reports net income of $3,200,000. There are 750,000 shares authorized, 600,000 shares issued and 500,000 shares of common stock outstanding. The company has no preferred stock. If the board of directors declares a $1 per share dividends, the total amount of dividends paid is:

Stock that carries special privileges or rights is called------------- stock.

Before dividends can be paid there must be a formal declaration by the board of directors.

One disadvantage of a corporation is: