Question 1

Common stockholders will receive a dividend:

Accepted Answer

A) if the corporation is reported a profit for the year. 
B) if the board of directors declares a dividend and any preferred stock requirements have been met. 
C) every year, whether the corporation is profitable or not. 
D) even when preferred stock requirements have not been met. 
A) if the corporation is reported a profit for the year. 
B) if the board of directors declares a dividend and any preferred stock requirements have been met. 
C) every year, whether the corporation is profitable or not. 
D) even when preferred stock requirements have not been met.

Question 2

Participating preferred stockholders:

Accepted Answer

A) receive dividends only after common stockholders have been paid dividends. 
B) receive cumulative dividends if dividends are passed in previous years. 
C) receive preference dividend amounts as well as a share of other dividends paid. 
D) give up their voting rights in exchange for dividend preferences. 
A) receive dividends only after common stockholders have been paid dividends. 
B) receive cumulative dividends if dividends are passed in previous years. 
C) receive preference dividend amounts as well as a share of other dividends paid. 
D) give up their voting rights in exchange for dividend preferences.

Question 3

The Northwest Corporation has outstanding 20,000 shares of 12%, $50 par-value, noncumulative, nonparticipating preferred stock and 100,000 authorized common shares of which 80,000 shares of
$10 par-value common stock are outstanding. The board of directors voted to distribute $60,000 as dividends in 2019, $140,000 in 2020, and $200,000 in 2021.
Compute the following:
1. Amount paid on each share of preferred stock in 2019.
2. Amount paid on each share of common stock in 2019.
3. Amount paid on each share of preferred stock in 2020.
4. Amount paid on each share of common stock in 2020.
5. Amount paid on each share of preferred stock in 2021.
6. Amount paid on each share of common stock in 2021.

Accepted Answer

1. $3.00; 2. zero; 3

Question 4

If the issuing corporation retains the right to repurchase the shares of preferred stock from the stockholders at a specified price, the preferred stock is--------- .

Accepted Answer

The answer of If the issuing corporation retains the right...

Question 5

The Ventura Corporation, a new corporation, took over the assets and liabilities of the Jeremy Ruggers Company on January 2, 2019. The assets and liabilities assumed, after appropriate revaluation by Ruggers Company, are shown below.
  
The Ventura Corporation is authorized to issue 100,000 shares of $10 par-value common stock and 50,000 shares of 12 percent, $50 par-value preferred stock.
Jan. 2 The corporation issued 3,000 shares of common stock and 300 shares of preferred stock at par to Ruggers for his equity in the sole proprietorship business and the corporation took over Ruggers' assets and liabilities.
2 Issued 2,500 shares of common stock to Shaundra Ferris at par value for cash.
2 Issued 800 shares of common stock and 200 shares preferred stock to Celina Delgado at par value for cash.
Required:
1. Record the transactions on page 1 of a general journal. Omit descriptions.
2. Prepare the opening balance sheet for the corporation on January 2, 2019
3. If Ventura Corporation paid $900 for legal fees, charter fee, and cost of engraving stock certificates, how would this transaction be recorded?

Accepted Answer

The answer of The Ventura Corporation, a new corporation, took...

Question 6

The Odegard Corporation has outstanding 80,000 shares of 5%, $100 par-value, noncumulative, nonparticipating preferred stock and 160,000 shares of $2 par-value common stock, sold at an average price of $20 per share. There were no dividends in arrears. The board of directors voted to distribute $240,000 as dividends in 2019, $410,000 in 2020, and $520,000 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.

Accepted Answer

1. $240,000; 2. zero

Question 7

A corporation has 1,000 shares of 12 percent, $60 par-value preferred stock and 20,000 shares of $2 par-value common stock outstanding. If the board of the directors declares dividends totaling $50,000, the common stockholders will receive a dividend of:

Accepted Answer

A) $2.00 a share. 
B) $2.14 a share. 
C) $2.50 a share. 
D) $2.75 a share. 
A) $2.00 a share. 
B) $2.14 a share. 
C) $2.50 a share. 
D) $2.75 a share.

Question 8

A corporation received a subscription for 200 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 $20,600 and a credit to:

Accepted Answer

A) Preferred Stock for $20,000 and a credit to Retained Earnings for $600. 
B) Preferred Stock Subscribed for $20,000 and a credit to Gain on Sale of Preferred Stock for
$600. 
C) Preferred Stock Subscribed for $20,000 and a credit to Paid-in Capital in Excess of Par Value
-Preferred Stock for $600. 
D) Preferred Stock Subscribed for $20,600. 
A) Preferred Stock for $20,000 and a credit to Retained Earnings for $600. 
B) Preferred Stock Subscribed for $20,000 and a credit to Gain on Sale of Preferred Stock for
$600. 
C) Preferred Stock Subscribed for $20,000 and a credit to Paid-in Capital in Excess of Par Value
-Preferred Stock for $600. 
D) Preferred Stock Subscribed for $20,600.

Question 9

The---------- accounts for all stock issued by a corporation and receives all cancelled and newly issued stock certificates from the transfer agent.

Accepted Answer

The answer of The---------- accounts for all stock issued by...

Question 10

The transfer of stock between shareholders is:

Accepted Answer

A) not recorded by the corporation. 
B) recorded in the general journal. 
C) recorded in the minute book. 
D) recorded in the capital stock transfer journal. 
A) not recorded by the corporation. 
B) recorded in the general journal. 
C) recorded in the minute book. 
D) recorded in the capital stock transfer journal.

Question 11

A corporation has 10,000 shares of 6 percent, $50 par-value noncumulative preferred stock and 50,000 shares of $4 par-value common stock outstanding. Last year, no dividends were paid. This year, the board of directors decided to pay a dividend of $80,000. The common stockholders will receive a dividend of:

Accepted Answer

A) $0.40 a share. 
B) $1.00 a share. 
C) $1.60 a share. 
D) $2.00 a share. 
A) $0.40 a share. 
B) $1.00 a share. 
C) $1.60 a share. 
D) $2.00 a share.

Question 12

The "preemptive right" enables shareholders to purchase additional shares to maintain their percentage ownership should the corporation issue additional common shares in the future.

Accepted Answer

A) True 
 B)False

Question 13

When common stock is issued, the par value, or stated value, of the shares issued is recorded in the Common Stock account.

Accepted Answer

A) True 
 B)False

Question 14

A corporation received a subscription for 1,000 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 $103,000 and a credit to:

Accepted Answer

A) Preferred Stock for $100,000 and a credit to Retained Earnings for $3,000. 
B) Preferred Stock Subscribed for $100,300. 
C) Preferred Stock Subscribed for $100,000 and a credit to Paid-in Capital in Excess of Par Value-Preferred Stock for $3,000. 
D) Preferred Stock Subscribed for $100,000 and a credit to Gain on Sale of Preferred Stock for
$3,000. 
A) Preferred Stock for $100,000 and a credit to Retained Earnings for $3,000. 
B) Preferred Stock Subscribed for $100,300. 
C) Preferred Stock Subscribed for $100,000 and a credit to Paid-in Capital in Excess of Par Value-Preferred Stock for $3,000. 
D) Preferred Stock Subscribed for $100,000 and a credit to Gain on Sale of Preferred Stock for
$3,000.

Question 15

Stock is issued to investors at the time they sign the stock subscription contract.

Accepted Answer

A) True 
 B)False

Question 16

No-par-value stock can be sold at any price while par value stock cannot be sold for less than its par value.

Accepted Answer

A) True 
 B)False

Question 17

Profit distribution to stockholders is called-------- .

Accepted Answer

The answer of Profit distribution to stockholders is called-------- ....

Question 18

State laws prohibit the issuance of stock at less than par or stated value.

Accepted Answer

A) True 
 B)False

Question 19

The outstanding stock of Adam Baum Company is composed of 25,000 shares of $100 par, 2%, cumulative preferred stock and 200,000 shares of $5 par common stock. Dividends have not been paid for the current year or the previous year. If $180,000 is to be distributed as dividends for the current year, what total amount will be distributed to the common stockholders?

Accepted Answer

A) $200,000. 
B) $100,000 
C) $50,000. 
D) $80,000. 
A) $200,000. 
B) $100,000 
C) $50,000. 
D) $80,000.

Question 20

A separate Common Stock account is kept in the general ledger for each common stockholder of a corporation.

Accepted Answer

A) True 
 B)False

Exam 20: Corporations: Formation and Capital Stock Transactions

Common stockholders will receive a dividend:

Participating preferred stockholders:

If the issuing corporation retains the right to repurchase the shares of preferred stock from the stockholders at a specified price, the preferred stock is--------- .

A corporation has 1,000 shares of 12 percent, $60 par-value preferred stock and 20,000 shares of $2 par-value common stock outstanding. If the board of the directors declares dividends totaling $50,000, the common stockholders will receive a dividend of:

A corporation received a subscription for 200 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 $20,600 and a credit to:

The---------- accounts for all stock issued by a corporation and receives all cancelled and newly issued stock certificates from the transfer agent.

The transfer of stock between shareholders is:

The "preemptive right" enables shareholders to purchase additional shares to maintain their percentage ownership should the corporation issue additional common shares in the future.

When common stock is issued, the par value, or stated value, of the shares issued is recorded in the Common Stock account.

A corporation received a subscription for 1,000 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 $103,000 and a credit to:

Stock is issued to investors at the time they sign the stock subscription contract.

No-par-value stock can be sold at any price while par value stock cannot be sold for less than its par value.

Profit distribution to stockholders is called-------- .

State laws prohibit the issuance of stock at less than par or stated value.

A separate Common Stock account is kept in the general ledger for each common stockholder of a corporation.

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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